Sea Limited: Fundamentals Are Intact, Despite Additional Risks Ahead

Aug. 25, 2022 6:12 PM ETSea Limited (SE)17 Comments
Jun Hao profile picture
Jun Hao
453 Followers

Summary

  • As the race to profitability tightens and with Garena’s declining profitability, Shopee and SeaMoney have seen huge QoQ improvements in profitability.
  • I believe SeaMoney can continue to grow into a meaningful driver of the overall company in the future.
  • My investment thesis for Sea Limited holds, but I have to acknowledge that there are certainly more risks today.

Shopee headquarters in Singapore

kokkai

Sea Limited (NYSE:SE) is a consumer internet company consisting of 3 separate businesses: 1) the gaming division, Garena, 2) the largest e-commerce platform in Southeast Asia (SEA), Shopee, and 3) the digital finance service business, SeaMoney.

Investment Thesis

Back

Garena Bookings

Image created by the author with data from SE's quarterly report

Garena's Quarterly Active Users, Quarterly Paying users, and paying user ratio

Image created by the author with data from SE's quarterly report

Garena's Adjusted EBITDA

Image created by the author with data from SE's quarterly report

Garena adjusted EBITDA margin

Image created by the author with data from SE's quarterly report

Shopee Gross Merchandise Value

Image created by the author with data from SE's quarterly report

Shopee's Revenue

Image created by the author with data from SE's quarterly report

Shopee's Take-Rate

Image created by the author with data from SE's quarterly report

Shopee's Number of Orders

Image created by the author with data from SE's quarterly report

MELI Revenue Breakdown

Mercado Libre 2Q22 Investor Presentation

Shopee's Loss Per Order

Image created by the author with data from SE's quarterly report

SeaMoney Total Payment Volume

Image created by the author with data from SE's quarterly report

SeaMoney Revenue

Image created by the author with data from SE's quarterly report

SeaMoney's Take-Rate

Image created by the author with data from SE's quarterly report

SeaMoney Users

Image created by the author with data from SE's quarterly report

SeaMoney Adjusted EBITDA + S&M

Image created by the author with data from SE's quarterly report

SeaMoney as a % of Revenue

Image created by the author with data from SE's quarterly report

Mercado Pago Growth Trajectory

Lationometrics

Sea Limited Balance Sheet

SE's 2Q22 Investor Presentation

Cash in investing activities breakdown

SE's 2Q22 quarterly report

Sea Limited Convertible Notes

SE's FY21 annual report

This article was written by

Jun Hao profile picture
453 Followers
Equity Research. Mostly Tech, Consumer & Sin Stocks. Student in the National University of Singapore (NUS).

Disclosure: I/we have a beneficial long position in the shares of SE either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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