Too much competition_老虎社区_美港股上老虎

2021-06-02

Too much competition

Analyzing Sea Limited's Relentless Growth<blockquote>分析Sea Limited的不懈增长</blockquote>

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{"i18n":{"language":"zh_CN"},"detailType":1,"isChannel":false,"data":{"magic":2,"id":113526030,"tweetId":"113526030","gmtCreate":1622627865620,"gmtModify":1631893612658,"author":{"id":3572261394011317,"idStr":"3572261394011317","authorId":3572261394011317,"authorIdStr":"3572261394011317","name":"peilinnggg","avatar":"https://static.tigerbbs.com/a19b0160838ba3d9a2736c3a8ed8abd0","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":12,"crmLevelSwitch":0,"individualDisplayBadges":[],"wearingBadges":[],"fanSize":6,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"title":"","extraTitle":"","html":"<html><head></head><body>Too much competition&nbsp;</body></html>","htmlText":"<html><head></head><body>Too much competition&nbsp;</body></html>","text":"Too much competition","highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"link":"https://laohu8.com/post/113526030","repostId":1100705667,"repostType":4,"repost":{"id":"1100705667","kind":"news","pubTimestamp":1622626441,"share":"https://www.laohunote.com/m/news/1100705667?lang=zh_CN&edition=full","pubTime":"2021-06-02 17:34","market":"us","language":"en","title":"Analyzing Sea Limited's Relentless Growth<blockquote>分析Sea Limited的不懈增长</blockquote>","url":"https://stock-news.laohu8.com/highlight/detail?id=1100705667","media":"seekingalpha","summary":"Summary\n\nThis article focuses on the growth engine that enables Sea Group. I provide a high-level ov","content":"Summary<blockquote>总结</blockquote> <ul> <li>This article focuses on the growth engine that enables Sea Group. I provide a high-level overview and dive deeper into each operating segment.</li> <li>The company has a significant advantage through segments that cross-pollinate each other with cash. Garena is currently funding the growth of Shopee and SeaMoney. This is a key moat contributor.</li> <li>Shopee continues to be the key top-line driver with substantial Gross Merchandise Value growth forecasted in Southeast Asia. Consequently, increasing take rates will likely lead to even higher revenue growth.</li> <li>Looking at overall online spending, the six largest Southeast Asian countries are forecasted to grow from $100B GMV in 2020 to $300B GMV in 2025. Sea stands to benefit across the board.</li> <li>At an FY2023 EV/S of ~8.3x, Sea Group is fairly priced for an investment. It is a long-term conviction \"buy and hold\" for me.</li> </ul> <img src=\"https://static.tigerbbs.com/e27123526e3031d4a551f336a9189f19\" tg-width=\"1536\" tg-height=\"1025\">Photo by Wachiwit/iStock Editorial via Getty Images<blockquote><ul><li>本文重点介绍 Sea Group 的增长引擎。我提供了一个高层次的概述，并深入探讨了每个运营部门。</li><li>该公司通过现金相互交叉授粉的部门拥有显着优势。Garena 目前正在资助 Shopee 和 SeaMoney 的发展。这是护城河的主要贡献者。</li><li>Shopee 仍然是主要的营收驱动因素，预计东南亚商品总价值将大幅增长。因此，提高接受率可能会带来更高的收入增长。</li><li>从整体在线支出来看，预计东南亚六个最大国家的GMV将从2020年的1000亿美元增长到2025年的3000亿美元。海洋将全面受益。</li><li>2023 财年 EV/S 约为 8.3 倍，Sea Group 的投资定价相当合理。对我来说，这是一个长期的信念“买入并持有”。</li></ul>摄影：Wachiwit/iStock 社论来自 Getty Images</blockquote> Sea Group (NYSE:SE) is still running in hyper-growth mode (&gt;100% YoY last quarter and on a last-twelve-month basis).<blockquote>Sea Group (NYSE:SE) 仍处于高速增长模式（上季度和过去 12 个月同比增长 &gt;100%）。</blockquote> It's been over a year since I first wrote about Sea on Seeking Alpha. The company's rise has been staggering and the business has continued to surpass most expectations, with the stock returning over 300% in the last 12 months. I'd like to use this article as an opportunity to dive into what makes such growth at a ~$120B market cap possible and put forward my opinion on why the company is positioned to win more in the coming years. While a lot of alpha has been captured in the past, I still expect substantial broad index outperformance going forward over the long term. I'm long SE.<blockquote>自从我第一次在《寻求阿尔法》上写海洋已经一年多了。该公司的崛起令人震惊，业务继续超出大多数人的预期，该股在过去12个月中的回报率超过300%。我想以这篇文章为契机，深入探讨是什么让约 120B 美元的市值实现如此增长，并就为什么该公司有望在未来几年赢得更多收入提出我的看法。虽然过去已经捕捉到了很多阿尔法，但我仍然预计从长远来看，综合指数将大幅跑赢大盘。我是龙瑟。</blockquote> Recap<blockquote>回顾</blockquote> Here's a quick recap of what the company constitutes. Sea Group is a Singapore-based consumer internet company that has three major divisions: Digital Entertainment, E-Commerce, and Digital Financial Services. In layman's terms, think of it as a smaller and younger version of Tencent (OTCPK:TCEHY) with a Southeast Asia focus.<blockquote>以下是该公司的组成情况。Sea Group是一家总部位于新加坡的消费互联网公司，拥有三个主要部门：数字娱乐、电子商务和数字金融服务。通俗地说，可以把它想象成一个更小、更年轻的腾讯控股（OTCPK:TCEHY），重点关注东南亚。</blockquote> <img src=\"https://static.tigerbbs.com/bd938ae2a667d8bf6c2c8b8094ff94ab\" tg-width=\"600\" tg-height=\"320\">Source: Author, Logos from Sea Group Media Resources<blockquote>资料来源：作者，Logos 来自 Sea Group Media Resources</blockquote> Garena<blockquote>加雷纳</blockquote> Their Digital Entertainment arm known as \"Garena\" began as a third party game licensor and operator for popular online games (mostly by Tencent) for the South East Asia region. It consequently grew into an independent mobile game developer, and they now operate one of the most widely played mobile games on the planet, Free Fire, which has about 650 million quarterly active users worldwide. Free Fire is a battle-royale style multiplayer game, optimized to run smoothly on mobile phones with lower computing power specifications.The game generates revenue primarily from in-app purchases. It also features social media aspects, and more recently, an e-sports ecosystem built around it to host global tournaments streamed across the world. The cohesive gaming, social media, and entertainment aspects have led it to be highly engaging and relatively sticky with low churn as far as mobile games go.<blockquote>他们的数字娱乐部门“Garena”最初是东南亚地区流行在线游戏（主要由腾讯控股开发）的第三方游戏授权商和运营商。因此，它发展成为一家独立的手机游戏开发商，他们现在运营着地球上最广泛玩的手机游戏之一Free Fire，该游戏在全球拥有约6.5亿季度活跃用户。Free Fire是一款大逃杀风格的多人游戏，经过优化，可在较低计算能力规格的手机上流畅运行.该游戏的收入主要来自应用内购买。它还具有社交媒体方面的功能，最近，围绕它建立了一个电子竞技生态系统，以举办遍布世界各地的全球锦标赛。就移动游戏而言，有凝聚力的游戏、社交媒体和娱乐方面使其具有高度吸引力和相对粘性，流失率较低。</blockquote> Shopee<blockquote>虾皮</blockquote> Shopee is the leading e-commerce platform in Southeast Asia + Taiwan, spanning about 7 countries with a population of over 600 million people. They also have a large presence in Latin America, including Mexico and Brazil (add another 300 million population). The app facilitated ~$12.6B in Gross Merchandise Value (GMV) last quarter. Almost all the markets it operates in features rising middle classes, rapid digital consumerization, and strong GDP growth rates. These geographies have also been historically underpenetrated on the digital front, and are currently experiencing consumer internet adoption at a higher rate than their developed country counterparts. The pandemic catalyzed the seemingly inevitable trend of e-commerce adoption.<blockquote>Shopee是东南亚+台湾领先的电子商务平台，覆盖约7个国家，人口超过6亿。他们在拉丁美洲也有大量存在，包括墨西哥和巴西（再加上3亿人口）。上季度，该应用程序促进了约 12.6B 美元的商品总价值 (GMV)。它运营的几乎所有市场都以不断壮大的中产阶级、快速的数字消费和强劲的GDP增长率为特征。这些地区在历史上在数字方面的渗透率也很低，目前消费者互联网的采用率高于发达国家。疫情催化了看似不可避免的电子商务采用趋势。</blockquote> SeaMoney<blockquote>海洋货币</blockquote> This is Sea Group's \"Digital Financial Services\" (Fintech) arm. SeaMoney includes a digital wallet, payments processing, credit offerings, and other financial services. The segment had over 26 million quarterly paying users with over $3.4B in total payment volume facilitated last quarter. It is Sea Group's youngest division but arguably presents the largest opportunity for the company given that most of the Southeast Asian population has historically been underbanked. Theoretically, investments, loans, credit, debit, and insurance are all potential pieces that can weave together under a unified consumer financial services ecosystem.<blockquote>这是Sea Group的“数字金融服务”（金融科技）部门。SeaMoney包括数字钱包、支付处理、信贷产品和其他金融服务。该细分市场拥有超过2600万季度付费用户，上个季度的总支付量超过3.4B美元。这是 Sea Group 最年轻的部门，但可以说是该公司最大的机遇，因为东南亚大部分人口历来银行服务不足。理论上，投资、贷款、信贷、借记和保险都是可以在统一的消费者金融服务生态系统下编织在一起的潜在部分。</blockquote> To summarize, Sea Group is a consumer internet titan with an ecosystem of high growth business divisions that are in total, likely touching over a billion people worldwide. On an LTM basis, the company's combined revenue grew 113.7% YoY. Sea is serving emerging markets that are experiencing internet adoption at accelerated rates, and is ballooning into a Tencent-like internet beast (consequently, they're Tencent-backed as well). A key factor in an investment consideration, is, of course, growth going forward. In the next few sections, I attempt to deconstruct growth using readily available-reported metrics and alternative data to make inferences on prospects.<blockquote>总而言之，Sea Group 是一家消费互联网巨头，拥有一个由高增长业务部门组成的生态系统，这些业务部门总共可能影响全球超过 10 亿人。按LTM计算，公司合并收入同比增长113.7%。Sea 服务于正在加速采用互联网的新兴市场，并正在膨胀成腾讯控股式的互联网野兽（因此，它们也得到了腾讯控股的支持）。投资考虑的一个关键因素当然是未来的增长。在接下来的几节中，我试图使用现成的报告指标和替代数据来解构增长，以对前景做出推断。</blockquote> Group Growth Through Cross-Pollination<blockquote>异花授粉的群体生长</blockquote> Big growth requires cash. Chasing an underpenetrated e-commerce opportunity spanning 100s of millions of consumers requires a lot of cash. Sea has executed well in raising capital and putting it to work for growth, often playing its cards close to the chest pre-2020. The secret sauce for effective cash utilization, however, lies in the company's three-headed ecosystem structure. Shopee's growth would not be possible without the preceding success of Garena. And it's fair to say that SeaMoney's odds of success are substantially better because of Shopee's proliferation. The following diagram explains this.<blockquote>大增长需要现金。追逐一个覆盖数亿消费者的未渗透电子商务机会需要大量现金。Sea 在筹集资金并将其用于增长方面表现出色，在 2020 年之前经常在资金附近打出自己的牌。然而，有效利用现金的秘诀在于公司的三头生态系统结构。如果没有 Garena 之前的成功，Shopee 的增长是不可能的。公平地说，由于 Shopee 的扩散，SeaMoney 的成功几率要大得多。下图解释了这一点。</blockquote> <img src=\"https://static.tigerbbs.com/6629de9aa49e0ca3375f92306d80c289\" tg-width=\"640\" tg-height=\"338\">Source: Author, Logos from Sea Group Media Resources<blockquote>资料来源：作者，Logos 来自 Sea Group Media Resources</blockquote> A popular concept in venture capital is the \"Valley of Death\". A freshly funded startup enterprise tends to burn cash to invest in product development, overhead, sales, etc. It continues to burn cash until it finds product-market fit, and revenues eventually grow large enough to make the system work and turn the company cash flow generative. Businesses are vulnerable from a financial standpoint during the cash burn and have to beat the clock as their limited cash pours out rapidly until sales balance out expenditure. Many seed-stage startups just die due to this. Since venture capital proliferated in the last two decades and access to private funding has supplied enormous cash ammunition to growth businesses post product-market fit, the burn phase has extended to the public markets as well. If a public company's strategy doesn't work, it tends to downsize, get mildly profitable at modest growth rates, and turn into an acquisition target. Alternatively, it may collect in the vast land of unfulfilled public tech stocks. That's the anatomy of a modern tech company in a nutshell.<blockquote>风险投资中一个流行的概念是“死亡谷”。一个新获得资金的初创企业往往会烧钱投资于产品开发、管理费用、销售等。它继续烧钱，直到找到产品与市场的契合度，收入最终增长到足以使系统运行并使公司产生现金流。从财务角度来看，企业在现金消耗期间很脆弱，必须争分夺秒，因为他们有限的现金会迅速流出，直到销售额抵消支出。许多种子期创业公司因此而夭折。由于风险投资在过去二十年中激增，获得私人资金为产品与市场契合后的增长企业提供了巨大的现金弹药，燃烧阶段也延伸到了公开市场。如果一家上市公司的战略不起作用，它往往会缩小规模，以适度的增长率获得适度利润，并成为收购目标。或者，它可能会在未实现的公共科技股的广阔土地上收集。简而言之，这就是现代科技公司的剖析。</blockquote> Expanding upon this concept, Sea Group isn't one company. It's a lot like three companies. As of 2021, Garena is well out of the cash flow valley of death, Shopee is burning big cash but is seemingly at a trough, and SeaMoney is just getting started. Proceeds from mature segments like Garena are used to pollinate growth in segments that have lower market penetration and longer growth runways (like Shopee &amp; SeaMoney).In totality, Sea Group is an ecosystem that continues to evolve with the next big company still embedded within, still in the making, all the time.What's impressive is that Shopee's market potential is larger than Garena's, and SeaMoney has an even larger theoretical market though any success might be early to call. The access to cash makes Sea Group's growth outright suffocating for competitors because individual non-ecosystems simply cannot compete on pricing, marketing budgets, and moderate economies of scale in the case of e-commerce. That's not to take away from Sea's excellent product and sales execution anyway. The following sections break down the three sub-companies and draw inferences from their growth metrics.<blockquote>扩展这一概念，Sea Group 不仅仅是一家公司。很像三家公司。截至 2021 年，Garena 已摆脱现金流死亡谷，Shopee 正在烧掉大量现金，但似乎正处于低谷，而 SeaMoney 才刚刚开始。Garena 等成熟细分市场的收益用于促进市场渗透率较低、增长跑道较长的细分市场（如 Shopee 和 SeaMoney）的增长。总的来说，Sea Group 是一个不断发展的生态系统，下一个大公司仍在其中，仍在酝酿之中。令人印象深刻的是，Shopee 的市场潜力比 Garena 更大，而 SeaMoney 的理论市场甚至更大，尽管任何成功对看涨期权来说都可能为时过早。获得现金使得 Sea Group 的增长完全窒息了竞争对手，因为在电子商务的情况下，单个非生态系统根本无法在定价、营销预算和适度规模经济方面竞争。无论如何，这并不能剥夺 Sea 出色的产品和销售执行力。以下部分对这三家子公司进行了细分，并从它们的增长指标中得出结论。</blockquote> Garena (Digital Entertainment)<blockquote>Garena（数字娱乐）</blockquote> <img src=\"https://static.tigerbbs.com/18d10df5e5cd40c3f8cdb6fa3565fb1e\" tg-width=\"510\" tg-height=\"264\">Source: Author,Data from Company Filings<blockquote>资料来源：作者，数据来自公司文件</blockquote> The charts above pertain to the Digital Entertainment segment, with the marked lines displaying YoY (Year-over-Year), and QoQ (Quarter-over-Quarter) percentage growth. Gross Bookings are the key top-line metric as they represent revenues that are yet to be recognized on the GAAP front. Due to the nature of in-app purchases and other payments made on apps like Free Fire etc., there's a fairly substantial difference between the two. Previously reported as Adjusted Revenues, Gross Bookings have held strong and have recently recorded 10% QoQ growth for the first quarter even though the pandemic has been easing off with a reopening trend. Q1-Q3 2020 saw rapid growth, while the last few quarters have tapered down to levels that are seemingly more muted. This should be expected to continue.<blockquote>上面的图表涉及数字娱乐领域，标记的线显示同比（同比）和环比（环比）百分比增长。总预订量是关键的营收指标，因为它们代表了尚未在 GAAP 上确认的收入。由于应用内购买和在Free Fire等应用上进行的其他支付的性质。，两者之间有相当大的区别。此前报告为调整后的收入，总预订量保持强劲，最近第一季度环比增长10%，尽管疫情随着重新开放的趋势而有所缓解。2020 年第一季度至第三季度出现了快速增长，而过去几个季度则逐渐放缓至看似较为温和的水平。预计这种情况还会继续下去。</blockquote> It is worth mentioning how Free Fire has stuck around instead of temporarily leading top mobile gaming charts like most other games. In the gaming world, you have temporarily viral games, and then you have games that have a dedicated following across millions of users that evolve and provide engagement over sustained periods of time. The latter includes Call of Duty, PUBG, League of Legends, and Fortnite to name a few. Ultimately, the revenues of these games are predictable and sticky enough. It appears as though Free Fire has joined this group.<blockquote>值得一提的是，《Free Fire》并没有像大多数其他游戏那样暂时领先移动游戏排行榜。在游戏世界中，你有暂时的病毒式游戏，然后你有在数百万用户中拥有专门追随者的游戏，这些用户在持续的一段时间内不断发展并提供参与度。后者包括《使命召唤看涨期权》、《PUBG》、《英雄联盟》和《堡垒之夜》等等。最终，这些游戏的收入是可预测的，也是足够粘性的。看来自由之火也加入了这个团体。</blockquote> The way Free Fire was built from the ground up is relatively contrarian. It's optimized to work on cheaper Android-powered smartphones instead of consoles and dedicated devices that are often seen as staple purchases for many gamers in developed countries. Getting a Switch, Xbox, or PC for most people in emerging markets is a serious expense. With Free Fire, you can get away with what you already have in India, Brazil, Mexico, and Indonesia. All you need is a smartphone and you're getting bang for your buck gaming and entertainment. This aspect has made it a perfect emerging market game.While most of the industry was focused on higher ticket experiences, Garena's contrarian outlook on making a game specifically for ignored categories of mobile players has helped it succeed.<blockquote>Free Fire 从头开始建造的方式相对逆向。它经过优化，可以在更便宜的Android智能手机上运行，而不是在发达国家许多游戏玩家通常被视为主要购买的游戏机和专用设备上运行。对于新兴市场的大多数人来说，购买 Switch、Xbox 或 PC 是一笔不小的开支。有了Free Fire，你可以逃脱你在印度、巴西、墨西哥和印度尼西亚已经拥有的东西。你所需要的只是一部智能手机，你就可以在游戏和娱乐方面得到回报。这一方面使其成为一个完美的新兴市场游戏。虽然大多数行业都专注于更高的门票体验，但Garena对专门为被忽视的移动玩家类别制作游戏的逆向前景帮助它取得了成功。</blockquote> <img src=\"https://static.tigerbbs.com/a46c2a9d96ac17e0ad6c91fe7eb13f24\" tg-width=\"508\" tg-height=\"265\"><blockquote></blockquote> <img src=\"https://static.tigerbbs.com/21c5e5ecd14f6544b380b4c99aa42150\" tg-width=\"508\" tg-height=\"265\">Source: Author, Data from Company Filings<blockquote>资料来源：作者，数据来自公司文件</blockquote> Despite going after large populations of price-sensitive emerging market gamers, we see a surprising number of users actually paying for in-app purchases every quarter. QPU growth has outpaced QAU growth, with a larger proportion of the overall user mix trending towards paying users over time (11.4%, 12.0%, and 12.3% respectively for the last three quarters). This is key for the division's bookings and revenues. About a year ago, I expressed concern regarding the over-reliance on Free Fire as a sustainable cash source. I questioned whether it was truly here to stay and won't be replaced by the next hot game. This concern was abated when I learned that the e-sports events were amassing millions of viewers, the game continued to evolve with seasons and geography-specific features, and the social media angle that resulted in network effects across players.It's impressive enough for a game to go to #1, but to stay in the top charts for 2-years running requires some excellent execution.<blockquote>尽管我们追求的是大量对价格敏感的新兴市场游戏玩家，但我们看到每个季度都有数量惊人的用户实际为应用内购买付费。QPU 的增长速度已经超过了 QAU 的增长速度，随着时间的推移，整体用户组合中更大比例趋向于付费用户（过去三个季度分别为 11.4%、12.0% 和 12.3%）。这是该部门预订和收入的关键。大约一年前，我对过度依赖免费消防作为可持续现金来源表示担忧。我质疑它是否真的会留在这里，不会被下一个热门游戏所取代。当我了解到电子竞技赛事正在积累数百万观众时，这种担忧有所减轻，游戏继续随着季节和地理特定特征而发展，社交媒体角度导致了玩家之间的网络效应。对于一款游戏来说，排名第一已经足够令人印象深刻了，但要连续两年保持在排行榜上，需要一些出色的执行力。</blockquote> Here's a table of Play Store rankings for the \"Games: Action\" category. I've included the Play Store since the majority of emerging market users are on Android as opposed to iOS.<blockquote>这是“游戏：动作”类别的Play商店排名表。我包括了Play商店，因为大多数新兴市场用户使用的是Android而不是iOS。</blockquote> <table> <tbody> <tr> <td>India</td> <td>Indonesia</td> <td>Pakistan</td> <td>Brazil</td> <td>Nigeria</td> <td>Bangladesh</td> <td>Mexico</td> <td>Philippines</td> <td>Vietnam</td> <td>Thailand</td> </tr> <tr> <td>Downloads: Gaming</td> <td>10</td> <td>17</td> <td>18</td> <td>8</td> <td>7</td> <td>3</td> <td>11</td> <td>135</td> <td>11</td> <td>10</td> </tr> <tr> <td>Downloads: Gaming Action</td> <td>2</td> <td>4</td> <td>3</td> <td>2</td> <td>1</td> <td>1</td> <td>3</td> <td>27</td> <td>2</td> <td>2</td> </tr> <tr> <td>Grossing: Gaming</td> <td>1</td> <td>1</td> <td>2</td> <td>1</td> <td>8</td> <td>2</td> <td>1</td> <td>20</td> <td>1</td> <td>1</td> </tr> <tr> <td>Grossing: Gaming Action</td> <td>1</td> <td>1</td> <td>2</td> <td>1</td> <td>2</td> <td>1</td> <td>1</td> <td>4</td> <td>1</td> <td>1</td> </tr> </tbody> </table> Source: App Annie, As of 28th May 2021<blockquote><table><tbody><tr><td>印度</td><td>印尼</td><td>巴基斯坦</td><td>巴西</td><td>尼日利亚</td><td>孟加拉国</td><td>墨西哥</td><td>菲律宾</td><td>越南</td><td>泰国</td></tr><tr><td>下载：游戏</td><td>10</td><td>17</td><td>18</td><td>8</td><td>7</td><td>3</td><td>11</td><td>135</td><td>11</td><td>10</td></tr><tr><td>下载：游戏动作</td><td>2</td><td>4</td><td>3</td><td>2</td><td>1</td><td>1</td><td>3</td><td>27</td><td>2</td><td>2</td></tr><tr><td>票房：游戏</td><td>1</td><td>1</td><td>2</td><td>1</td><td>8</td><td>2</td><td>1</td><td>20</td><td>1</td><td>1</td></tr><tr><td>票房：游戏动作</td><td>1</td><td>1</td><td>2</td><td>1</td><td>2</td><td>1</td><td>1</td><td>4</td><td>1</td><td>1</td></tr></tbody></table>资料来源：App Annie，截至2021年5月28日</blockquote> The above charts are compiled from some of the most populated emerging market countries I could find, along with my free App Annie account. While new downloads might have reduced over the last two quarters from the pandemic boost last year, the numbers are still impressive and Free Fire remains the top-grossing game amongst most of the geographies above. Importantly, it is the consistency of these rankings over time.<blockquote>上面的图表是从我能找到的一些人口最多的新兴市场国家以及我的免费应用程序Annie帐户汇编的。虽然由于去年疫情的推动，新下载量在过去两个季度可能有所下降，但数字仍然令人印象深刻，Free Fire仍然是上述大多数地区中票房最高的游戏。重要的是，随着时间的推移，这些排名是一致性的。</blockquote> Going by the growth metrics, long-term engagement is likely to be sustained, but there should be a sequential slowdown in new user adds and incremental gross bookings in the coming months.This is consistent with what the management expects and reasonable given the reopening and saturation of the game across the global market. On the bright side, Digital Entertainment recorded an Adjusted EBITDA margin of 64% last quarter that should scale proportionately with gross bookings. After building out the game, there isn't too much in terms of costs to take away from the bottom line. Large sales and marketing expenditure isn't quite needed now that the game has global network effects. It's really about back-end, maintenance, and continued development work to keep evolving the already successful game and ecosystem.<blockquote>从增长指标来看，长期参与度可能会持续，但未来几个月新用户增加和总预订量应该会连续放缓。考虑到全球市场的重新开放和饱和，这符合管理层的预期，也是合理的。从好的一面来看，数字娱乐上季度调整后的 EBITDA 利润率为 64%，应与总预订量成比例增长。在构建了游戏之后，就成本而言，没有太多可以从底线中拿走的。既然游戏有全球网络效应，就不需要大量的销售和营销支出了。这实际上是关于后端、维护和持续开发工作，以保持已经成功的游戏和生态系统的发展。</blockquote> Shopee (E-Commerce)<blockquote>Shopee（电子商务）</blockquote> The following two charts present gross orders and gross merchandise value (GMV) for the e-commerce division.<blockquote>以下两张图表显示了电子商务部门的总订单和总商品价值（GMV）。</blockquote> <img src=\"https://static.tigerbbs.com/cb09b8563ac1df1a5d8e7458b30c3054\" tg-width=\"512\" tg-height=\"264\" referrerpolicy=\"no-referrer\"><blockquote></blockquote> <img src=\"https://static.tigerbbs.com/628c3b271ee17e9c430045d0f686f75c\" tg-width=\"512\" tg-height=\"264\">Source: Author, Data from Company Filings<blockquote>资料来源：作者，数据来自公司文件</blockquote> The trends are similar across both charts. Q2 2020 saw acceleration due to the pandemic, Q4 2020 saw a seasonal high, and Q1 2021 saw QoQ deceleration going out of the holiday season across most geographies. As Gross Orders have outpaced GMV, we can conclude that more people are ordering cheaper items on the platform on average. If we consider seasonality, the 5-6% QoQ growth in Q1 2021 isn't particularly concerning and we'll likely see a sequential pickup in the next quarter. It's fair to expect the reopening trend to put some downward pressure on growth but the long term feasibility of the platform has likely cemented itself for consumers. The convenience and product pricing on e-commerce is simply hard to compete with for brick &amp; mortar, and we're not going back to pre-pandemic levels of online retail again. The following earnings release excerpt provides some colour on e-commerce GAAP Revenue.<blockquote>两张图表的趋势相似。2020年第二季度因疫情而加速，2020年第四季度出现季节性高点，2021年第一季度在大多数地区的假期结束后环比减速。随着总订单量超过GMV，我们可以得出结论，平均有更多的人在平台上订购更便宜的商品。如果我们考虑季节性因素，2021 年第一季度 5-6% 的环比增长并不特别令人担忧，我们可能会在下一季度看到环比回升。公平地预计重新开放的趋势会给增长带来一些下行压力，但该平台的长期可行性可能已经巩固了消费者的地位。电子商务的便利性和产品价格根本无法与实体店竞争，我们不会再次回到大流行前的在线零售水平。以下财报发布摘录为电子商务 GAAP 收入提供了一些信息。</blockquote> GAAP revenue was US$922.3 million, up 250.4% year-on-year. GAAP revenue included US$715.9 million of GAAP marketplace revenue, up 285.0% year-on-year, and US$206.4 million of GAAP product revenue, up 167.1% year-on-year. Source:Q1 2021 Earnings Press Release Comparing the above information to the GMV chart, we can infer thatSales have substantially outpaced GMV growth. This indicates a very deliberate move by the company to increase their take rates in dominant geographies.Take rates are a function of the GMV and represent the proportion of the total GMV that makes it to revenues. As the standard consumer internet company goes, you expand and acquire customers at all costs, then you increase prices and get profitable after capturing a market and habituating consumers to your platform. Overall, the actions have also decreased Adjusted EBITDA losses substantially and that allows Sea to play the balancing cash flow act on demand.<blockquote>GAAP收入为9.223亿美元，同比增长250.4%。GAAP收入包括GAAP市场收入7.159亿美元，同比增长285.0%，GAAP产品收入2.064亿美元，同比增长167.1%。资料来源：2021 年第一季度收益新闻稿将上述信息与GMV图表进行比较，我们可以推断出销售额已大大超过 GMV 增长速度。这表明该公司采取了非常深思熟虑的举措，以提高其在主要地区的接受率。Take 费率是 GMV 的函数，代表总 GMV 占收入的比例。就像标准的消费互联网公司一样，你不惜一切代价扩张和获取客户，然后在占领市场并让消费者习惯你的平台后提高价格并获得利润。总体而言，这些行动还大幅减少了调整后 EBITDA 损失，并使 Sea 能够按需发挥平衡现金流法案。</blockquote> Both in Southeast Asia and in Taiwan, Shopee ranked first in the Shopping category by average monthly active users and total time spent in-app on Android for the first quarter of 2021, according to App Annie. In Indonesia, where Shopee further accelerated its year-on-year growth in gross orders, it continued to rank first by average monthly active users and total time spent in app on Android in the Shopping category for the first quarter of 2021, according to App Annie. Source:Q1 2021 Earnings Press Release From a high-level view, Southeast Asia &amp; Taiwan seem pretty much covered. However, within this region, Indonesia still presents the fiercest battleground for Shopee as it competes against the SoftBank-backed Tokopedia. The following charts show monthly website visits for both companies.<blockquote>根据 App Annie 的数据，2021 年第一季度，Shopee 在东南亚和台湾的平均月活跃用户和 Android 应用内花费的总时间均在购物类别中排名第一。根据 App Annie 的数据，在印度尼西亚，Shopee 的总订单量进一步加速了同比增长，2021 年第一季度，Shopee 在购物类别中的平均月活跃用户和在 Android 应用上花费的总时间继续排名第一。资料来源：2021 年第一季度收益新闻稿从高层来看，东南亚和台湾似乎几乎被覆盖了。然而，在这个地区，印度尼西亚仍然是Shopee最激烈的战场，因为它与软银支持的Tokopedia竞争。下图显示了两家公司每月的网站访问量。</blockquote> <img src=\"https://static.tigerbbs.com/49440f62634a1c3ccc9ebfdd0c7a33ba\" tg-width=\"481\" tg-height=\"289\">Source:Southeast Asia Map of eCommerce, iPrice Group<blockquote>资料来源：iPrice集团东南亚电子商务地图</blockquote> Monthly web visits from the iPrice Group show that Tokopedia saw more traffic (not necessarily sales) during the last quarter while it was behind during the last few. However, on mobile (App Store &amp; Android), Shopee is the undisputed leader in the Shopping category. This is reassuring since mobile e-commerce has been outpacing total e-commerce as a category in almost every geography across every platform.<blockquote>iPrice Group每月的网络访问量显示，Tokopedia在最后一个季度看到了更多的流量（不一定是销售额），而在最后几个季度却落后了。然而，在移动（App Store&amp;Android）上，Shopee是购物类别无可争议的领导者。这是令人放心的，因为移动电子商务作为一个类别，几乎在每个平台的每个地区都超过了总电子商务。</blockquote> <table> <tbody> <tr> <td>Indonesia Mobile Rankings</td> <td>Q1 20</td> <td>Q2 20</td> <td>Q3 20</td> <td>Q4 20</td> <td>Q1 21</td> </tr> <tr> <td>Shopee App Store</td> <td>1</td> <td>1</td> <td>1</td> <td>1</td> <td>1</td> </tr> <tr> <td>Shopee PlayStore</td> <td>1</td> <td>1</td> <td>1</td> <td>1</td> <td>1</td> </tr> <tr> <td>Tokopedia App Store</td> <td>2</td> <td>2</td> <td>2</td> <td>2</td> <td>2</td> </tr> <tr> <td>Tokopedia PlayStore</td> <td>3</td> <td>3</td> <td>4</td> <td>4</td> <td>4</td> </tr> </tbody> </table> Source: Southeast Asia Map of eCommerce, iPrice Group<blockquote><table><tbody><tr><td>印度尼西亚移动排名</td><td>Q1 20</td><td>第二季度20</td><td>第三季度 20</td><td>第四季度 20</td><td>Q1 21</td></tr><tr><td>Shopee应用商店</td><td>1</td><td>1</td><td>1</td><td>1</td><td>1</td></tr><tr><td>Shopee应用商店</td><td>1</td><td>1</td><td>1</td><td>1</td><td>1</td></tr><tr><td>Tokopedia应用商店</td><td>2</td><td>2</td><td>2</td><td>2</td><td>2</td></tr><tr><td>百科应用商店</td><td>3</td><td>3</td><td>4</td><td>4</td><td>4</td></tr></tbody></table>资料来源：iPrice Group 东南亚电子商务地图</blockquote> I would conclude that Tokopedia is a key competitor that needs to be watched closely and will prevent Shopee from exercising its take rates more liberally in the country. Furthermore, Indonesia represents the largest Southeast Asian market for e-commerce.Cross-pollination isn't just occurring across Sea's segments but also across Shopee's different e-commerce geographies.Profits from Shopee Thailand, for example, may be used to bring forth more competitive product pricing to Shopee Indonesia. Tokopedia is distinctly e-Commerce and limited to Indonesia, and likely doesn't have these internal cash generative advantages.<blockquote>我的结论是，Tokopedia 是一个需要密切关注的关键竞争对手，并将阻止 Shopee 在该国更自由地行使其收费标准。此外，印度尼西亚是东南亚最大的电子商务市场。异花授粉不仅发生在 Sea 的各个细分市场，也发生在 Shopee 不同的电子商务区域。例如，Shopee Thailand 的利润可能会被用来为 Shopee Indonesia 带来更具竞争力的产品价格。Tokopedia显然是电子商务，仅限于印度尼西亚，可能没有这些内部现金产生优势。</blockquote> Let's take a look at what's happening across the globe in Latin America. Shopee is growing like wildfire in Mexico and Brazil. The charts below represent recent data as of late May.<blockquote>让我们来看看拉丁美洲全球正在发生的事情。Shopee在墨西哥和巴西像野火一样发展。下图显示了截至五月下旬的最新数据。</blockquote> <img src=\"https://static.tigerbbs.com/e59030ed9023a1f492a597a9af00d646\" tg-width=\"640\" tg-height=\"247\">Source: App Annie, Rankings by Country in the \"Shopping\" category<blockquote>资料来源：App Annie，“购物”类别中按国家/地区排名</blockquote> Brazil and Mexico together make up for a population of ~330 million. The other e-commerce star in the category, MercadoLibre (MELI) ranks behind Shopee on Android for both Brazil and Mexico. The rankings depend on downloads instead of engagement, and MercadoLibre is often pegged to have a majority market share in Latin America as a whole (dominates Argentina). However, what the above alternative data above tell us is that Shopee has momentum in user share acquisition on an absolute basis. One can infer that more people are downloading Shopee in Mexico and Brazil as of late May compared to MercadoLibre at a faster rate. Higher downloads often translate to higher relatively higher market share gains.<blockquote>巴西和墨西哥加起来约有3.3亿人口。该类别的另一个电子商务明星MercadoLibre（MELI）在巴西和墨西哥的Android上都落后于Shopee。排名取决于下载量而不是参与度，MercadoLibre通常被认为在整个拉丁美洲拥有大部分市场份额（阿根廷占主导地位）。然而，上述备选数据告诉我们的是，Shopee在用户份额获取方面绝对有势头。可以推断，与MercadoLibre相比，截至5月底，墨西哥和巴西下载Shopee的人更多。较高的下载量通常会转化为相对较高的市场份额。</blockquote> Add all the Shopee geographies together and they represent a billion people and a combined GDP of $6.5T according to my calculations (Source for GDP:Worldometer). I reckon this is where to start when drawing up true long-term potential before narrowing down further.<blockquote>根据我的计算，将所有 Shopee 地区加起来，它们代表了 10 亿人和 6.5 万亿美元的总 GDP（GDP 来源：Worldometer).我认为这是在进一步缩小范围之前绘制真正的长期潜力时的起点。</blockquote> SeaMoney (Digital Financial Services)<blockquote>SeaMoney（数字金融服务）</blockquote> <ul> <li>Total Payment Volumes increased to $3.4B in Q1 21, from $1.0B during the same period last year</li> <li>Quarterly Paying Users increased to 26.1 million in Q1 21, from ~10 million during the same period last year</li> </ul> Source:Q1 2021 Earnings Release<blockquote><ul><li>21 年第一季度的总支付量从去年同期的 $1.0B 增加到 $3.4B</li><li>Q1 21 季度付费用户从去年同期的约 1000 万增至 2610 万</li></ul>资料来源：2021 年第一季度收益发布</blockquote> SeaMoney is the umbrella under which Sea Group operates multiple Fintech Apps including Shopee Pay. Current products include payments and payment processing, but if one were to look beyond into other Fintech Apps in China or the West, digital financial services tend to coalesce into super apps. For many people living in Southeast Asia, it isn't even about disruption but rather their first introduction to financial services of any sort. Unfortunately, a glance at the Fintech environment would leave any public market investor a bit confused.<blockquote>SeaMoney 是 Sea Group 运营包括 Shopee Pay 在内的多个金融科技应用程序的保护伞。目前的产品包括支付和支付处理，但如果超越中国或西方的其他金融科技应用，数字金融服务往往会融合成超级应用。对于许多生活在东南亚的人来说，这甚至不是颠覆，而是他们第一次接触任何形式的金融服务。不幸的是，金融科技环境的一瞥都会让任何公开市场投资者感到有点困惑。</blockquote> <img src=\"https://static.tigerbbs.com/09e8a02fd03188b0d9cb12841f889fe5\" tg-width=\"1280\" tg-height=\"501\">Source:FintechNews.SG<blockquote>资料来源：FintechNews.SG</blockquote> 26.1 million quarterly paying users (QPUs), and not monthly-PUs or daily-PUs for that matter doesn't give us much granularity in data or how the segment is truly performing. $3.4B in Transaction Payment Volume is somewhat impressive, considering the last quarter saw about $12.6B in GMV on Shopee. Ultimately, the broader adoption of SeaMoney by both merchants and consumers beyond the Shopee platform is important to catalyze network large scale effects. The greater the versatility of SeaMoney across instances in real-life, the better the hold the division would have over consumers. Longer-term, offering just payments is not enough. Credit, Debit, Investing, and other financial services, all in one app have been shown to differentiate the winners from the losers in geographies like China, or in the United States with Cash App by Square (SQ).<blockquote>2610 万季度付费用户 (QPU)，而不是按月付费用户或按日付费用户，这并不能让我们了解数据或该细分市场的真实表现。考虑到上一季度 Shopee 上的 GMV 约为 12.6B 美元，3.4B 美元的交易支付量有些令人印象深刻。最终，Shopee平台之外的商家和消费者更广泛地采用SeaMoney对于催化网络大规模效应非常重要。SeaMoney在现实生活中的多功能性越强，该部门对消费者的控制就越好。从长远来看，仅仅提供付款是不够的。信贷、借记、投资和其他金融服务，all in one App已被证明可以在中国等地区或美国通过Cash App by Square（SQ）区分赢家和输家。</blockquote> What can be said though, is that chances for continued growth, and winning market share are higher due to the group cross-pollination effects and network effects against Shopee customers. I would still see the segment through the eyes of an embedded option in the share price that would produce asymmetric reward if it does expand to more customers.<blockquote>不过，可以说的是，由于群体异花授粉效应和针对 Shopee 客户的网络效应，持续增长和赢得市场份额的机会更高。我仍然会从股价中嵌入的期权的角度来看待该细分市场，如果它确实扩展到更多客户，该期权将产生不对称的回报。</blockquote> The Runway Ahead<blockquote>前方的跑道</blockquote> The excerpts below were taken from a report published in late 2020 by Google, Temasek, and Bain &amp; Company. The report highlights internet spending forecasts over six major markets in Southeast Asia: Singapore, Indonesia, Philippines, Thailand, Malaysia, and Vietnam.<blockquote>以下摘录摘自谷歌、淡马锡和贝恩公司在2020年底发布的一份报告。该报告重点介绍了东南亚六个主要市场的互联网支出预测：新加坡、印度尼西亚、菲律宾、泰国、马来西亚和越南。</blockquote> <img src=\"https://static.tigerbbs.com/bffb6329895d550a13b311bb474fde85\" tg-width=\"640\" tg-height=\"222\" referrerpolicy=\"no-referrer\"><blockquote></blockquote> <img src=\"https://static.tigerbbs.com/6a66aadbe2d042623e0efa580879f9f2\" tg-width=\"640\" tg-height=\"335\">Source:e-Conomy SEA 2020; by Google, Temasek, and Bain &amp; Company<blockquote>资料来源：电子经济海2020；作者：谷歌、淡马锡和贝恩公司</blockquote> As a whole, the internet economy in these countries is expected to compound at a CAGR (Compound Annual Growth Rate) of 24%, almost tripling from $105B in GMV in 2020 to $309B in 2025. This provides a sense of scale for the region and the internet opportunity that Sea currently operates in as a leader. Note that these numbers exclude Taiwan and Latin America.<blockquote>总体而言，这些国家的互联网经济预计将以24%的CAGR（复合年增长率）复合，从2020年的1050亿美元的GMV增长到2025年的3090亿美元，几乎增长了两倍。这为该地区提供了规模感，也为 Sea 目前作为领导者运营的互联网机会提供了机会。请注意，这些数字不包括台湾和拉丁美洲。</blockquote> For Digital Entertainment, Garena's Free Fire market appears to be a lot closer to saturation considering it is already one of the highest-grossing mobile games on the planet. Other Garena endeavours have a chance of success though I'd argue that \"Free Fire\"-like success is hard to come by especially in mobile gaming. Digital Financial Services is still early to call at least until it achieves broader mass adoption across the region. 26 million paying users is significant, though we'll have to give the business time until we can call it a meaningful sales contributor that in turn drives the stock price. As of now, it's a cash burn.<blockquote>对于数字娱乐来说，Garena的Free Fire市场似乎更接近饱和，因为它已经是这个星球上收入最高的手机游戏之一。Garena的其他努力也有成功的机会，尽管我认为“自由射击”式的成功很难获得，尤其是在移动游戏中。数字金融服务对看涨期权来说还为时尚早，至少在它在整个地区实现更广泛的大规模采用之前是如此。2600 万付费用户意义重大，尽管我们必须给企业时间，直到我们能够看涨期权成为有意义的销售贡献者，进而推动股价。到目前为止，这是一个烧钱的过程。</blockquote> That leaves e-Commerce as the main sales driver for the company in the next 2-3 years. Here are some country-specific forecasts for e-Commerce by the same source.<blockquote>这使得电子商务成为公司未来2-3年的主要销售驱动力。以下是同一来源对电子商务的一些特定国家的预测。</blockquote> <img src=\"https://static.tigerbbs.com/b13ad7630877eaae1221848e7aa7d6e3\" tg-width=\"640\" tg-height=\"321\">Source:e-Conomy SEA 2020, Local Highlights<blockquote>资料来源：电子经济海洋2020，本地亮点</blockquote> As one would expect, Indonesia is the largest market. Vietnam is expected to compound at the fastest rate over the next few years. It's important to note that while the CAGRs are drawn in the 20-30% range, 2021 will see the highest rate while 2025 will see the lowest. 40%+ YoY SEA GMV growth for 2021 is quite likely in my opinion while 2025 could be closer to 15%.<blockquote>正如人们所料，印度尼西亚是最大的市场。预计越南将在未来几年以最快的速度复合。值得注意的是，虽然CAGR在20-30%范围内，但2021年将是最高的，而2025年将是最低的。我认为，2021 年海上 GMV 同比增长很可能超过 40%，而 2025 年可能接近 15%。</blockquote> The above chart uses GMV or Gross Merchandise Value. As discussed earlier, sales are a function of the take rate and the GMV. The take rate increases, the sales increase. Sea does this by dominating geographies and then deliberately increasing the take rate when network effects or the habituation of consumers on Shopee works at scale. Therefore, Sea's sales growth is set to outpace GMV expansion, especially when they widen their lead in a market. Given Latin America is also experiencing rapid Shopee adoption, it is reasonable to expect hyper-growth in the e-Commerce segment for years. The company expects 112% YoY growth for Shopee in FY2021 at the midpoint of their guidance (Source:Q4 20 Transcript).<blockquote>上图使用GMV或商品总价值。如前所述，销售额是接受率和GMV的函数。接受率增加，销售额增加。Sea 通过控制地理位置来做到这一点，然后在网络效应或消费者对 Shopee 的习惯大规模发挥作用时故意提高接受率。因此，Sea 的销售增长将超过 GMV 的扩张，尤其是当他们扩大市场领先优势时。鉴于拉丁美洲也正在经历Shopee的快速采用，有理由预期电子商务领域未来几年将出现高速增长。该公司预计 Shopee 2021 财年同比增长 112%，处于其指引的中点（资料来源：2020 年第四季度成绩单).</blockquote> Weave the above pieces together, Sea has an immense growth runway. The e-Commerce opportunity indicates that the company can theoretically be in hyper-growth mode for another 2-3 years, well into 2023.<blockquote>将上述部分编织在一起，Sea 拥有巨大的增长跑道。电子商务机会表明，该公司理论上可以在 2023 年之前再处于 2-3 年的高速增长模式。</blockquote> With an established competitive moat, if there's one company to bet on to capitalize and win on the $300B internet GMV opportunity for 2025 (not counting Latin America &amp; Taiwan), Sea seems to be it. I expect the management will also come up with newer verticals that could expand their TAM further. Online in-app investing? travel? TV and movies? Streaming? With network effects this good, they have an unfair advantage. The management has already executed across multiple businesses and seems to deeply understand how the emerging market consumer thinks. They've also displayed evidence of tailoring apps, like Free Fire, to individual geography tastes to maximize execution. Let's look at the financials and valuation multiples to see how much of their future success is already factored in.<blockquote>有了既定的竞争护城河，如果有一家公司可以押注于利用并赢得 2025 年 3000 亿美元的互联网 GMV 机会（不包括拉丁美洲和台湾），Sea 似乎就是其中之一。我预计管理层也会提出新的垂直领域，进一步扩大他们的TAM。在线应用内投资？旅行？电视和电影？流动？网络效应这么好，他们就有了不公平的优势。管理层已经执行了多项业务，似乎深刻理解新兴市场消费者的想法。他们还展示了根据个人地理口味定制应用程序的证据，如Free Fire，以最大限度地提高执行力。让我们看看财务状况和估值倍数，看看他们未来的成功在多大程度上已经被考虑在内。</blockquote> Group Financial Overview<blockquote>集团财务概览</blockquote> I previously mentioned the cash flow valley of death and how segments balance out to achieve cash flow generative growth. The company reports Adjusted EBITDA figures by segment that display similar trends. The \"adjustments\" are quite substantial compared to GAAP metrics, but they're a reasonable indicator after removing stock-based compensation, convertible interest payments, and non-core profitability generation. We're looking long-term here, so the game becomes comparing profitability to itself across time rather than other businesses. I'm more interested in trends and margin expansion rather than absolute values for now. The following chart shows how the breakdown balances out.<blockquote>我之前提到过现金流死亡谷以及各部门如何平衡以实现现金流生成增长。该公司报告了按部门划分的调整后 EBITDA 数据，显示了类似的趋势。与 GAAP 指标相比，这些“调整”相当可观，但在去除基于股票的薪酬、可转换利息支付和非核心盈利能力后，它们是一个合理的指标。我们在这里着眼于长远，因此游戏变成了将盈利能力与自身进行比较，而不是与其他业务进行比较。目前，我对趋势和利润率扩张更感兴趣，而不是绝对值。下图显示了细分是如何平衡的。</blockquote> <img src=\"https://static.tigerbbs.com/2d09aa44220209f2c3a08bdf77363fee\" tg-width=\"640\" tg-height=\"347\">Source: Author, Data from Company Filings<blockquote>资料来源：作者，数据来自公司文件</blockquote> The trends were seen above follow the cash flow valley diagram. Digital Entertainment is funding Shopee and SeaMoney, and the net result (the bright pink line) is Group Adjusted EBITDA positive for the past four quarters. Going forward, I expect e-Commerce to pass its valley shortly as sales growth decelerates, and expect digital financial services to continue to burn cash at higher amounts sequentially. The group's total financial performance is encapsulated in the chart below:<blockquote>上面看到的趋势遵循现金流谷图。Digital Entertainment 正在为 Shopee 和 SeaMoney 提供资金，净结果（亮粉色线）是过去四个季度的集团调整后 EBITDA 为正值。展望未来，我预计随着销售增长放缓，电子商务很快就会度过低谷，并预计数字金融服务将继续以更高的速度消耗现金。本集团的整体财务表现概括于下图：</blockquote> <img src=\"https://static.tigerbbs.com/50cdf1dd4ad0cc063ae074d6bec713bd\" tg-width=\"605\" tg-height=\"352\">Source: Author, Data from Company Filings<blockquote>资料来源：作者，数据来自公司文件</blockquote> Gross Profits have risen due to higher take rates in e-Commerce and improving incremental margins on Digital Entertainment. These margins would come under some pressure as Shopee will outpace Garena, and the lower-margin e-commerce will make a larger proportion of the gross profit mix. Adjusted EBITDA is under control, and while the company is unprofitable on a GAAP basis, I believe it is still fair given that the top-line is growing at triple-digit percentages. Total Revenue for Q4 has grown 12.6% QoQ and 146.7% YoY. On an LTM basis, Revenues have grown 113.7% YoY. With a long-runway ahead, and with the currently phenomenal product and sales execution, Sea Group is a financially healthy company.The profit tradeoff for growth is fair, even though it's a rarity given the sheer scale of the business.<blockquote>由于电子商务的较高采用率和数字娱乐增量利润率的提高，毛利润有所上升。这些利润率将面临一些压力，因为 Shopee 将超过 Garena，而利润率较低的电子商务将在毛利润组合中占据更大的比例。调整后的 EBITDA 已得到控制，虽然该公司按 GAAP 计算尚未盈利，但考虑到营收正以三位数的百分比增长，我相信这仍然是公平的。第四季度总收入环比增长12.6%，同比增长146.7%。按 LTM 计算，收入同比增长 113.7%。凭借漫长的跑道，以及目前非凡的产品和销售执行力，Sea Group 是一家财务状况良好的公司。以利润换取增长是公平的，尽管考虑到业务的庞大规模，这种情况很少见。</blockquote> Investors would take some relief in the fact that the company has amassed ~$5.8B in Cash &amp; Equivalents on its balance sheet that would fund losses for some time. If need be, there is a profit switch in Shopee that the company can activate that will result in larger take rates to boost profitability. Sellers on the platform may have no choice in such a situation, considering the breadth, reach, and engagement on the Shopee platform and would go along with the asking price. There is a substantial moat here and the resulting pricing power can be exercised on demand to boost profitability. This isn't new information; Amazon's (AMZN) US e-commerce for example has made similar moves.<blockquote>投资者会松一口气，因为该公司在其资产负债表上积累了约 5.8B 美元的现金及等价物，这将为一段时间的损失提供资金。如有必要，Shopee 中有一个利润开关，该公司可以激活该开关，这将导致更高的采用率，以提高盈利能力。考虑到 Shopee 平台的广度、影响力和参与度，平台上的卖家在这种情况下可能别无选择，并且会按照要价行事。这里有一个巨大的护城河，由此产生的定价权可以按需行使，以提高盈利能力。这不是新信息；例如，亚马逊（AMZN）的美国电子商务也采取了类似的举措。</blockquote> Valuation<blockquote>估值</blockquote> <img src=\"https://static.tigerbbs.com/1c5cf2d88f832fa4e10dd048d0492f1d\" tg-width=\"640\" tg-height=\"331\">Source: Koyfin<blockquote>资料来源：Koyfin</blockquote> Group Gross Profits are at the 30% range and Shopee specific metrics are expectedly lower. So a 23.7x LTM EV/S multiple is obviously huge. When contextualizing growth prospects and the excellent competitive positioning, the forward EV/S metrics are far more reasonable. According to the Koyfin database, the analyst consensus forward multiples are as follow:<blockquote>集团毛利润在30%范围内，Shopee的具体指标预计会更低。因此，23.7倍的LTM EV/S倍数显然是巨大的。当结合增长前景和出色的竞争定位时，远期EV/S指标要合理得多。根据 Koyfin 数据库，分析师共识远期倍数如下：</blockquote> <ul> <li>FY 2021 EV/S of 16.0x</li> <li>FY 2022 EV/S of 11.1x</li> <li>FY 2023 EV/S of 8.3x</li> </ul> Source: Koyfin<blockquote><ul><li>2021 财年 EV/S 为 16.0 倍</li><li>2022 财年 EV/S 为 11.1x</li><li>2023 财年 EV/S 为 8.3 倍</li></ul>资料来源：Koyfin</blockquote> Analysts have historically been on the side of conservatism for almost every high-growth tech company. Sea Group has almost always beaten its revenue figures though they usually fall slightly short on profitability. The 8.3x for 2023 means it's valued on Tencent-like multiples (adjusted for lower gross profits) but in three years. It is indeed a baby Tencent, and I would also argue that&nbsp;OTCPK:TCEHY&nbsp;itself is somewhat undervalued given the low sentiment surrounding regulations and foreign investments in Chinese tech. Are these multiples reasonable? And where is the upside? I believe SE's current price fair, but the upside will have to come from sustained revenue beats, continued product developments, and mass-scale user acquisition. Multiple compression may need to counter share price dilution, and then actually give us a reasonable rate of return. This is a situation where the following wisdom is applicable in my opinion:<blockquote>对于几乎所有高增长科技公司，分析师历来都站在保守一边。Sea Group 几乎总是超出其收入数据，尽管它们通常略低于盈利能力。2023 年的 8.3 倍意味着它的估值与腾讯控股类似（根据较低的毛利润进行调整），但需要三年时间。它确实是一个婴儿腾讯控股，我还认为，鉴于围绕中国科技的监管和外国投资的低迷情绪，OTCPK:TCEHY 本身在某种程度上被低估了。这些倍数合理吗？好处在哪里？我认为 SE 目前的价格是合理的，但上涨空间必须来自持续的收入增长、持续的产品开发和大规模用户获取。多重压缩可能需要对抗股价稀释，然后实际给我们一个合理的回报率。在我看来，这是一种适用以下智慧的情况：</blockquote> It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price-Warren Buffett In my experience, when the quality of the company shines for a fair price, it's still worth an investment. Winners continue to win, and Sea Group is a rockstar business factoring in most qualitative aspects.Given the visionary management (Forrest Li &amp; Co.) and what they've achieved so far, I'd put the odds in their favour.<blockquote>以合理的价格收购一家优秀的公司，远比以优惠的价格收购一家优秀的公司要好得多——沃伦·巴菲特根据我的经验，当公司的质量以合理的价格大放异彩时，它仍然值得投资。赢家不断获胜，Sea Group 在大多数定性方面都是一家摇滚明星企业。考虑到富有远见的管理层（Forrest Li&amp;Co.）和他们迄今为止所取得的成就，我认为胜算对他们有利。</blockquote> Speaking of odds, there are potential catalysts that could pull the future towards us. One would hypothesise that Shopee winning in Indonesia on a more definitive basis would result in sales getting a boost from a strategic take-rate expansion. Across the planet, the Latin American story is looking impressive and shouldn't be underestimated given the size of Brazil and Mexico. That's an additional 50% e-Commerce TAM compared to Southeast Asia. SeaMoney still has a lot to prove but the network effects from Shopee should help sustain an onboarding of customers. The overall business has optionality. By that I mean, embedded options that could be triggered by a few developments and unlock share price appreciation. These are worth a premium.<blockquote>说到几率，有潜在的催化剂可以将未来拉向我们。有人可能会假设，Shopee 在印度尼西亚以更明确的方式获胜，将导致销售额从战略性上座率扩张中获得提振。在全球范围内，拉丁美洲的故事看起来令人印象深刻，考虑到巴西和墨西哥的规模，不应被低估。与东南亚相比，电子商务TAM增加了50%。SeaMoney 仍有很多东西需要证明，但 Shopee 的网络效应应该有助于维持客户的加入。整体业务有可选择性。我的意思是，一些事态发展可能会触发并解锁股价升值的嵌入式期权。这些值得溢价。</blockquote> I'm currently long SE. I reckon there's still substantial outperformance potential over benchmarks though the easy alpha potential like we saw in 2020 is unlikely to present itself ever again. The bull thesis is too obvious now, everyone knows it, but it should still play out with alpha in my opinion. Every tech hedge fund in the world seems to be holding SE, and I agree with them. On the other hand, let's look at risks.<blockquote>我现在很长。我认为，尽管我们在 2020 年看到的轻松 alpha 潜力不太可能再次出现，但仍有很大的超越基准的潜力。牛市论点现在太明显了，大家都知道，但在我看来还是应该和阿尔法一起上演。世界上每个科技对冲基金似乎都持有SE，我同意他们的观点。另一方面，我们来看看风险。</blockquote> Risks<blockquote>风险</blockquote> <ul> <li>Free Fire Concentration:The mobile gaming industry is fast, dynamic, and always changing. The next great game is always around the corner and it's entirely possible that Free Fire's popularity fades and the accompanying cash generation dries up. I believe this risk has reduced over the last year, but it's still worth considering.</li> <li>Competition:Tokopedia in Indonesia, MercadoLibre in Latin America, and other internet businesses like Grab &amp; Gojek. There's plenty of competition at multiple fronts throughout the ecosystem.</li> <li>Overly aggressive expansion strategy:Sea Group's expansion into 7-8 countries and counting demonstrates a uniquely aggressive growth strategy. While their approach has worked out so far, it may work against them in the future. Knowing when to give up in a market that doesn't play out can stop unnecessary cash burn when the prize isn't significant enough.</li> <li>Systemic Risks:As a GAAP net loss business, Sea Group is subject to higher volatility, deep drawdowns, and sector/style selloffs. The sell-off in March is a recent example.</li> <li>Macro:Regulations and geopolitical factors in the emerging market geographies are typically more volatile than those in the US. A variety of macro risks and F/X risks are present at large.</li> </ul> Ending Notes<blockquote><ul><li>自由火力浓度：移动游戏行业是快速、动态且不断变化的。下一个伟大的游戏总是在拐角处，完全有可能Free Fire的受欢迎程度消退，随之而来的现金产生枯竭。我相信这种风险在去年有所降低，但仍然值得考虑。</li><li>竞争：印度尼西亚的Tokopedia、拉丁美洲的MercadoLibre以及Grab&amp;Gojek等其他互联网企业。在整个生态系统的多个方面都有很多竞争。</li><li>过于激进的扩张战略：Sea Group 已扩展到 7-8 个国家并不断增加，这表明了其独特的积极增长战略。虽然他们的方法到目前为止已经奏效，但在未来可能会对他们不利。当奖金不够丰厚时，知道何时放弃可以阻止不必要的现金消耗。</li><li>系统风险：作为 GAAP 净亏损业务，Sea Group 会受到更高的波动性、深度回撤和行业/风格抛售的影响。三月份的抛售就是最近的一个例子。</li><li>宏：新兴市场地区的监管和地缘政治因素通常比美国更具波动性。各种宏观风险和外汇风险普遍存在。</li></ul>结尾附注</blockquote> Concerns about overvaluation are perhaps warranted on a short-term outlook. In this situation, I do not have a strong near-term opinion but instead, harbour conviction in the company's long-term prospects. If one were to think in years rather than months, it is apparent to me that no competitor comes close to Sea Group in its chances for dominating e-commerce market share in most of its operating geographies. Indonesia is a key country to watch as Tokopedia is still putting up a fight. I'd put the odds on Sea since Tokopedia is a vanilla e-commerce player and doesn't have the scale and cross-pollination advantage unless they merge with another giant. Latin America is also looking like it will be a meaningful push to the top-line if not near term profitability. With excellent execution, Sea Group is leveraging its competitive positioning and is winning more often than not. The cross-pollination effect is a key advantage for internal cash generation and will help sustain the relentless growth as the business captures the massive opportunity that remains.<blockquote>从短期来看，对估值过高的担忧或许是有道理的。在这种情况下，我对公司的长期前景没有强烈的看法。如果用几年而不是几个月来思考，在我看来，显然没有任何竞争对手能够在其大部分运营地区主导电子商务市场份额方面与 Sea Group 相提并论。印度尼西亚是一个值得关注的关键国家，因为Tokopedia仍在努力。我会把胜算押在海上，因为Tokopedia是一家普通的电子商务公司，除非他们与另一家巨头合并，否则没有规模和异花授粉优势。拉丁美洲看起来也将是对营收的有意义的推动，如果不是短期盈利的话。凭借出色的执行力，Sea Group 正在利用其竞争定位，并且经常获胜。异花授粉效应是内部现金产生的一个关键优势，并将有助于在业务抓住剩余的巨大机会时维持持续增长。</blockquote> I imagine many experienced investors that caught the Amazon (AMZN) train early would look back on their investment as a staple component of their portfolio over the years. In my opinion, Sea Group offers a similar proposition a bit earlier in its lifecycle. Currently trading at a market cap of $130B, Sea can theoretically double in a few years once again in my opinion. Tencent in a duopolistic landscape (withBABA) features a $748B market cap across a 1.3 billion Chinese population. SE can go a third of that in a few years with a monopolistic position in Southeast Asia, scaling to a 1 billion strong emerging market population. This isn't a pure alpha opportunity as multiples have substantially expanded, but I would ballpark the company to deliver a 20%+ compounded return for investors that continue to hold it for a few years.I'm long SE.<blockquote>我想，许多早期搭上亚马逊 (AMZN) 列车的经验丰富的投资者会回顾他们多年来的投资，将其视为其投资组合的主要组成部分。在我看来，Sea Group 在其生命周期的早期提出了类似的主张。Sea 目前的市值为 130B 美元，在我看来，理论上几年内可以再次翻一番。双寡头格局中的腾讯控股 (withBABA) 在 13 亿中国人口中拥有 7480 亿美元的市值。凭借在东南亚的垄断地位，SE 可以在几年内将其增加到三分之一，并扩展到拥有 10 亿强大的新兴市场人口。这不是一个纯粹的阿尔法机会，因为市盈率已经大幅扩大，但我认为该公司将为继续持有该公司几年的投资者提供 20% 以上的复合回报。我是龙瑟。</blockquote> *****<blockquote>*****</blockquote> Thanks for reading! On a separate note, I'm excited to announce that I will be releasing a Marketplace subscription service soon called The Abstract Portfolio. High growth tech investing can involve a lot of fragmented information, sentiment, and noise. The Abstract Portfolio aims to bring focus and clarity by weaving together what matters and filtering out what doesn't. The service will feature a concentrated portfolio of cherry-picked stocks backed by rigorous fundamental research, assembled to deliver high absolute returns. Stay tuned!<blockquote>感谢阅读!另外，我很高兴地宣布，我将很快发布一项名为抽象投资组合的市场订阅服务。高增长的科技投资可能涉及大量碎片化的信息、情绪和噪音。抽象作品集旨在通过将重要的东西编织在一起，过滤掉不重要的东西来带来焦点和清晰。该服务将提供由严格基本面研究支持的精选股票投资组合，以提供高绝对回报。敬请期待!</blockquote>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Analyzing Sea Limited's Relentless Growth<blockquote>分析Sea Limited的不懈增长</blockquote></title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 12.5px; color: #7E829C; margin: 0;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAnalyzing Sea Limited's Relentless Growth<blockquote>分析Sea Limited的不懈增长</blockquote>\n</h2>\n<h4 class=\"meta\">\n\nseekingalpha2021-06-02 17:34\n\n</h4>\n</header>\n<article>\nSummary<blockquote>总结</blockquote> <ul> <li>This article focuses on the growth engine that enables Sea Group. I provide a high-level overview and dive deeper into each operating segment.</li> <li>The company has a significant advantage through segments that cross-pollinate each other with cash. Garena is currently funding the growth of Shopee and SeaMoney. This is a key moat contributor.</li> <li>Shopee continues to be the key top-line driver with substantial Gross Merchandise Value growth forecasted in Southeast Asia. Consequently, increasing take rates will likely lead to even higher revenue growth.</li> <li>Looking at overall online spending, the six largest Southeast Asian countries are forecasted to grow from $100B GMV in 2020 to $300B GMV in 2025. Sea stands to benefit across the board.</li> <li>At an FY2023 EV/S of ~8.3x, Sea Group is fairly priced for an investment. It is a long-term conviction \"buy and hold\" for me.</li> </ul> <img src=\"https://static.tigerbbs.com/e27123526e3031d4a551f336a9189f19\" tg-width=\"1536\" tg-height=\"1025\">Photo by Wachiwit/iStock Editorial via Getty Images<blockquote><ul><li>本文重点介绍 Sea Group 的增长引擎。我提供了一个高层次的概述，并深入探讨了每个运营部门。</li><li>该公司通过现金相互交叉授粉的部门拥有显着优势。Garena 目前正在资助 Shopee 和 SeaMoney 的发展。这是护城河的主要贡献者。</li><li>Shopee 仍然是主要的营收驱动因素，预计东南亚商品总价值将大幅增长。因此，提高接受率可能会带来更高的收入增长。</li><li>从整体在线支出来看，预计东南亚六个最大国家的GMV将从2020年的1000亿美元增长到2025年的3000亿美元。海洋将全面受益。</li><li>2023 财年 EV/S 约为 8.3 倍，Sea Group 的投资定价相当合理。对我来说，这是一个长期的信念“买入并持有”。</li></ul>摄影：Wachiwit/iStock 社论来自 Getty Images</blockquote> Sea Group (NYSE:SE) is still running in hyper-growth mode (&gt;100% YoY last quarter and on a last-twelve-month basis).<blockquote>Sea Group (NYSE:SE) 仍处于高速增长模式（上季度和过去 12 个月同比增长 &gt;100%）。</blockquote> It's been over a year since I first wrote about Sea on Seeking Alpha. The company's rise has been staggering and the business has continued to surpass most expectations, with the stock returning over 300% in the last 12 months. I'd like to use this article as an opportunity to dive into what makes such growth at a ~$120B market cap possible and put forward my opinion on why the company is positioned to win more in the coming years. While a lot of alpha has been captured in the past, I still expect substantial broad index outperformance going forward over the long term. I'm long SE.<blockquote>自从我第一次在《寻求阿尔法》上写海洋已经一年多了。该公司的崛起令人震惊，业务继续超出大多数人的预期，该股在过去12个月中的回报率超过300%。我想以这篇文章为契机，深入探讨是什么让约 120B 美元的市值实现如此增长，并就为什么该公司有望在未来几年赢得更多收入提出我的看法。虽然过去已经捕捉到了很多阿尔法，但我仍然预计从长远来看，综合指数将大幅跑赢大盘。我是龙瑟。</blockquote> Recap<blockquote>回顾</blockquote> Here's a quick recap of what the company constitutes. Sea Group is a Singapore-based consumer internet company that has three major divisions: Digital Entertainment, E-Commerce, and Digital Financial Services. In layman's terms, think of it as a smaller and younger version of Tencent (OTCPK:TCEHY) with a Southeast Asia focus.<blockquote>以下是该公司的组成情况。Sea Group是一家总部位于新加坡的消费互联网公司，拥有三个主要部门：数字娱乐、电子商务和数字金融服务。通俗地说，可以把它想象成一个更小、更年轻的腾讯控股（OTCPK:TCEHY），重点关注东南亚。</blockquote> <img src=\"https://static.tigerbbs.com/bd938ae2a667d8bf6c2c8b8094ff94ab\" tg-width=\"600\" tg-height=\"320\">Source: Author, Logos from Sea Group Media Resources<blockquote>资料来源：作者，Logos 来自 Sea Group Media Resources</blockquote> Garena<blockquote>加雷纳</blockquote> Their Digital Entertainment arm known as \"Garena\" began as a third party game licensor and operator for popular online games (mostly by Tencent) for the South East Asia region. It consequently grew into an independent mobile game developer, and they now operate one of the most widely played mobile games on the planet, Free Fire, which has about 650 million quarterly active users worldwide. Free Fire is a battle-royale style multiplayer game, optimized to run smoothly on mobile phones with lower computing power specifications.The game generates revenue primarily from in-app purchases. It also features social media aspects, and more recently, an e-sports ecosystem built around it to host global tournaments streamed across the world. The cohesive gaming, social media, and entertainment aspects have led it to be highly engaging and relatively sticky with low churn as far as mobile games go.<blockquote>他们的数字娱乐部门“Garena”最初是东南亚地区流行在线游戏（主要由腾讯控股开发）的第三方游戏授权商和运营商。因此，它发展成为一家独立的手机游戏开发商，他们现在运营着地球上最广泛玩的手机游戏之一Free Fire，该游戏在全球拥有约6.5亿季度活跃用户。Free Fire是一款大逃杀风格的多人游戏，经过优化，可在较低计算能力规格的手机上流畅运行.该游戏的收入主要来自应用内购买。它还具有社交媒体方面的功能，最近，围绕它建立了一个电子竞技生态系统，以举办遍布世界各地的全球锦标赛。就移动游戏而言，有凝聚力的游戏、社交媒体和娱乐方面使其具有高度吸引力和相对粘性，流失率较低。</blockquote> Shopee<blockquote>虾皮</blockquote> Shopee is the leading e-commerce platform in Southeast Asia + Taiwan, spanning about 7 countries with a population of over 600 million people. They also have a large presence in Latin America, including Mexico and Brazil (add another 300 million population). The app facilitated ~$12.6B in Gross Merchandise Value (GMV) last quarter. Almost all the markets it operates in features rising middle classes, rapid digital consumerization, and strong GDP growth rates. These geographies have also been historically underpenetrated on the digital front, and are currently experiencing consumer internet adoption at a higher rate than their developed country counterparts. The pandemic catalyzed the seemingly inevitable trend of e-commerce adoption.<blockquote>Shopee是东南亚+台湾领先的电子商务平台，覆盖约7个国家，人口超过6亿。他们在拉丁美洲也有大量存在，包括墨西哥和巴西（再加上3亿人口）。上季度，该应用程序促进了约 12.6B 美元的商品总价值 (GMV)。它运营的几乎所有市场都以不断壮大的中产阶级、快速的数字消费和强劲的GDP增长率为特征。这些地区在历史上在数字方面的渗透率也很低，目前消费者互联网的采用率高于发达国家。疫情催化了看似不可避免的电子商务采用趋势。</blockquote> SeaMoney<blockquote>海洋货币</blockquote> This is Sea Group's \"Digital Financial Services\" (Fintech) arm. SeaMoney includes a digital wallet, payments processing, credit offerings, and other financial services. The segment had over 26 million quarterly paying users with over $3.4B in total payment volume facilitated last quarter. It is Sea Group's youngest division but arguably presents the largest opportunity for the company given that most of the Southeast Asian population has historically been underbanked. Theoretically, investments, loans, credit, debit, and insurance are all potential pieces that can weave together under a unified consumer financial services ecosystem.<blockquote>这是Sea Group的“数字金融服务”（金融科技）部门。SeaMoney包括数字钱包、支付处理、信贷产品和其他金融服务。该细分市场拥有超过2600万季度付费用户，上个季度的总支付量超过3.4B美元。这是 Sea Group 最年轻的部门，但可以说是该公司最大的机遇，因为东南亚大部分人口历来银行服务不足。理论上，投资、贷款、信贷、借记和保险都是可以在统一的消费者金融服务生态系统下编织在一起的潜在部分。</blockquote> To summarize, Sea Group is a consumer internet titan with an ecosystem of high growth business divisions that are in total, likely touching over a billion people worldwide. On an LTM basis, the company's combined revenue grew 113.7% YoY. Sea is serving emerging markets that are experiencing internet adoption at accelerated rates, and is ballooning into a Tencent-like internet beast (consequently, they're Tencent-backed as well). A key factor in an investment consideration, is, of course, growth going forward. In the next few sections, I attempt to deconstruct growth using readily available-reported metrics and alternative data to make inferences on prospects.<blockquote>总而言之，Sea Group 是一家消费互联网巨头，拥有一个由高增长业务部门组成的生态系统，这些业务部门总共可能影响全球超过 10 亿人。按LTM计算，公司合并收入同比增长113.7%。Sea 服务于正在加速采用互联网的新兴市场，并正在膨胀成腾讯控股式的互联网野兽（因此，它们也得到了腾讯控股的支持）。投资考虑的一个关键因素当然是未来的增长。在接下来的几节中，我试图使用现成的报告指标和替代数据来解构增长，以对前景做出推断。</blockquote> Group Growth Through Cross-Pollination<blockquote>异花授粉的群体生长</blockquote> Big growth requires cash. Chasing an underpenetrated e-commerce opportunity spanning 100s of millions of consumers requires a lot of cash. Sea has executed well in raising capital and putting it to work for growth, often playing its cards close to the chest pre-2020. The secret sauce for effective cash utilization, however, lies in the company's three-headed ecosystem structure. Shopee's growth would not be possible without the preceding success of Garena. And it's fair to say that SeaMoney's odds of success are substantially better because of Shopee's proliferation. The following diagram explains this.<blockquote>大增长需要现金。追逐一个覆盖数亿消费者的未渗透电子商务机会需要大量现金。Sea 在筹集资金并将其用于增长方面表现出色，在 2020 年之前经常在资金附近打出自己的牌。然而，有效利用现金的秘诀在于公司的三头生态系统结构。如果没有 Garena 之前的成功，Shopee 的增长是不可能的。公平地说，由于 Shopee 的扩散，SeaMoney 的成功几率要大得多。下图解释了这一点。</blockquote> <img src=\"https://static.tigerbbs.com/6629de9aa49e0ca3375f92306d80c289\" tg-width=\"640\" tg-height=\"338\">Source: Author, Logos from Sea Group Media Resources<blockquote>资料来源：作者，Logos 来自 Sea Group Media Resources</blockquote> A popular concept in venture capital is the \"Valley of Death\". A freshly funded startup enterprise tends to burn cash to invest in product development, overhead, sales, etc. It continues to burn cash until it finds product-market fit, and revenues eventually grow large enough to make the system work and turn the company cash flow generative. Businesses are vulnerable from a financial standpoint during the cash burn and have to beat the clock as their limited cash pours out rapidly until sales balance out expenditure. Many seed-stage startups just die due to this. Since venture capital proliferated in the last two decades and access to private funding has supplied enormous cash ammunition to growth businesses post product-market fit, the burn phase has extended to the public markets as well. If a public company's strategy doesn't work, it tends to downsize, get mildly profitable at modest growth rates, and turn into an acquisition target. Alternatively, it may collect in the vast land of unfulfilled public tech stocks. That's the anatomy of a modern tech company in a nutshell.<blockquote>风险投资中一个流行的概念是“死亡谷”。一个新获得资金的初创企业往往会烧钱投资于产品开发、管理费用、销售等。它继续烧钱，直到找到产品与市场的契合度，收入最终增长到足以使系统运行并使公司产生现金流。从财务角度来看，企业在现金消耗期间很脆弱，必须争分夺秒，因为他们有限的现金会迅速流出，直到销售额抵消支出。许多种子期创业公司因此而夭折。由于风险投资在过去二十年中激增，获得私人资金为产品与市场契合后的增长企业提供了巨大的现金弹药，燃烧阶段也延伸到了公开市场。如果一家上市公司的战略不起作用，它往往会缩小规模，以适度的增长率获得适度利润，并成为收购目标。或者，它可能会在未实现的公共科技股的广阔土地上收集。简而言之，这就是现代科技公司的剖析。</blockquote> Expanding upon this concept, Sea Group isn't one company. It's a lot like three companies. As of 2021, Garena is well out of the cash flow valley of death, Shopee is burning big cash but is seemingly at a trough, and SeaMoney is just getting started. Proceeds from mature segments like Garena are used to pollinate growth in segments that have lower market penetration and longer growth runways (like Shopee &amp; SeaMoney).In totality, Sea Group is an ecosystem that continues to evolve with the next big company still embedded within, still in the making, all the time.What's impressive is that Shopee's market potential is larger than Garena's, and SeaMoney has an even larger theoretical market though any success might be early to call. The access to cash makes Sea Group's growth outright suffocating for competitors because individual non-ecosystems simply cannot compete on pricing, marketing budgets, and moderate economies of scale in the case of e-commerce. That's not to take away from Sea's excellent product and sales execution anyway. The following sections break down the three sub-companies and draw inferences from their growth metrics.<blockquote>扩展这一概念，Sea Group 不仅仅是一家公司。很像三家公司。截至 2021 年，Garena 已摆脱现金流死亡谷，Shopee 正在烧掉大量现金，但似乎正处于低谷，而 SeaMoney 才刚刚开始。Garena 等成熟细分市场的收益用于促进市场渗透率较低、增长跑道较长的细分市场（如 Shopee 和 SeaMoney）的增长。总的来说，Sea Group 是一个不断发展的生态系统，下一个大公司仍在其中，仍在酝酿之中。令人印象深刻的是，Shopee 的市场潜力比 Garena 更大，而 SeaMoney 的理论市场甚至更大，尽管任何成功对看涨期权来说都可能为时过早。获得现金使得 Sea Group 的增长完全窒息了竞争对手，因为在电子商务的情况下，单个非生态系统根本无法在定价、营销预算和适度规模经济方面竞争。无论如何，这并不能剥夺 Sea 出色的产品和销售执行力。以下部分对这三家子公司进行了细分，并从它们的增长指标中得出结论。</blockquote> Garena (Digital Entertainment)<blockquote>Garena（数字娱乐）</blockquote> <img src=\"https://static.tigerbbs.com/18d10df5e5cd40c3f8cdb6fa3565fb1e\" tg-width=\"510\" tg-height=\"264\">Source: Author,Data from Company Filings<blockquote>资料来源：作者，数据来自公司文件</blockquote> The charts above pertain to the Digital Entertainment segment, with the marked lines displaying YoY (Year-over-Year), and QoQ (Quarter-over-Quarter) percentage growth. Gross Bookings are the key top-line metric as they represent revenues that are yet to be recognized on the GAAP front. Due to the nature of in-app purchases and other payments made on apps like Free Fire etc., there's a fairly substantial difference between the two. Previously reported as Adjusted Revenues, Gross Bookings have held strong and have recently recorded 10% QoQ growth for the first quarter even though the pandemic has been easing off with a reopening trend. Q1-Q3 2020 saw rapid growth, while the last few quarters have tapered down to levels that are seemingly more muted. This should be expected to continue.<blockquote>上面的图表涉及数字娱乐领域，标记的线显示同比（同比）和环比（环比）百分比增长。总预订量是关键的营收指标，因为它们代表了尚未在 GAAP 上确认的收入。由于应用内购买和在Free Fire等应用上进行的其他支付的性质。，两者之间有相当大的区别。此前报告为调整后的收入，总预订量保持强劲，最近第一季度环比增长10%，尽管疫情随着重新开放的趋势而有所缓解。2020 年第一季度至第三季度出现了快速增长，而过去几个季度则逐渐放缓至看似较为温和的水平。预计这种情况还会继续下去。</blockquote> It is worth mentioning how Free Fire has stuck around instead of temporarily leading top mobile gaming charts like most other games. In the gaming world, you have temporarily viral games, and then you have games that have a dedicated following across millions of users that evolve and provide engagement over sustained periods of time. The latter includes Call of Duty, PUBG, League of Legends, and Fortnite to name a few. Ultimately, the revenues of these games are predictable and sticky enough. It appears as though Free Fire has joined this group.<blockquote>值得一提的是，《Free Fire》并没有像大多数其他游戏那样暂时领先移动游戏排行榜。在游戏世界中，你有暂时的病毒式游戏，然后你有在数百万用户中拥有专门追随者的游戏，这些用户在持续的一段时间内不断发展并提供参与度。后者包括《使命召唤看涨期权》、《PUBG》、《英雄联盟》和《堡垒之夜》等等。最终，这些游戏的收入是可预测的，也是足够粘性的。看来自由之火也加入了这个团体。</blockquote> The way Free Fire was built from the ground up is relatively contrarian. It's optimized to work on cheaper Android-powered smartphones instead of consoles and dedicated devices that are often seen as staple purchases for many gamers in developed countries. Getting a Switch, Xbox, or PC for most people in emerging markets is a serious expense. With Free Fire, you can get away with what you already have in India, Brazil, Mexico, and Indonesia. All you need is a smartphone and you're getting bang for your buck gaming and entertainment. This aspect has made it a perfect emerging market game.While most of the industry was focused on higher ticket experiences, Garena's contrarian outlook on making a game specifically for ignored categories of mobile players has helped it succeed.<blockquote>Free Fire 从头开始建造的方式相对逆向。它经过优化，可以在更便宜的Android智能手机上运行，而不是在发达国家许多游戏玩家通常被视为主要购买的游戏机和专用设备上运行。对于新兴市场的大多数人来说，购买 Switch、Xbox 或 PC 是一笔不小的开支。有了Free Fire，你可以逃脱你在印度、巴西、墨西哥和印度尼西亚已经拥有的东西。你所需要的只是一部智能手机，你就可以在游戏和娱乐方面得到回报。这一方面使其成为一个完美的新兴市场游戏。虽然大多数行业都专注于更高的门票体验，但Garena对专门为被忽视的移动玩家类别制作游戏的逆向前景帮助它取得了成功。</blockquote> <img src=\"https://static.tigerbbs.com/a46c2a9d96ac17e0ad6c91fe7eb13f24\" tg-width=\"508\" tg-height=\"265\"><blockquote></blockquote> <img src=\"https://static.tigerbbs.com/21c5e5ecd14f6544b380b4c99aa42150\" tg-width=\"508\" tg-height=\"265\">Source: Author, Data from Company Filings<blockquote>资料来源：作者，数据来自公司文件</blockquote> Despite going after large populations of price-sensitive emerging market gamers, we see a surprising number of users actually paying for in-app purchases every quarter. QPU growth has outpaced QAU growth, with a larger proportion of the overall user mix trending towards paying users over time (11.4%, 12.0%, and 12.3% respectively for the last three quarters). This is key for the division's bookings and revenues. About a year ago, I expressed concern regarding the over-reliance on Free Fire as a sustainable cash source. I questioned whether it was truly here to stay and won't be replaced by the next hot game. This concern was abated when I learned that the e-sports events were amassing millions of viewers, the game continued to evolve with seasons and geography-specific features, and the social media angle that resulted in network effects across players.It's impressive enough for a game to go to #1, but to stay in the top charts for 2-years running requires some excellent execution.<blockquote>尽管我们追求的是大量对价格敏感的新兴市场游戏玩家，但我们看到每个季度都有数量惊人的用户实际为应用内购买付费。QPU 的增长速度已经超过了 QAU 的增长速度，随着时间的推移，整体用户组合中更大比例趋向于付费用户（过去三个季度分别为 11.4%、12.0% 和 12.3%）。这是该部门预订和收入的关键。大约一年前，我对过度依赖免费消防作为可持续现金来源表示担忧。我质疑它是否真的会留在这里，不会被下一个热门游戏所取代。当我了解到电子竞技赛事正在积累数百万观众时，这种担忧有所减轻，游戏继续随着季节和地理特定特征而发展，社交媒体角度导致了玩家之间的网络效应。对于一款游戏来说，排名第一已经足够令人印象深刻了，但要连续两年保持在排行榜上，需要一些出色的执行力。</blockquote> Here's a table of Play Store rankings for the \"Games: Action\" category. I've included the Play Store since the majority of emerging market users are on Android as opposed to iOS.<blockquote>这是“游戏：动作”类别的Play商店排名表。我包括了Play商店，因为大多数新兴市场用户使用的是Android而不是iOS。</blockquote> <table> <tbody> <tr> <td>India</td> <td>Indonesia</td> <td>Pakistan</td> <td>Brazil</td> <td>Nigeria</td> <td>Bangladesh</td> <td>Mexico</td> <td>Philippines</td> <td>Vietnam</td> <td>Thailand</td> </tr> <tr> <td>Downloads: Gaming</td> <td>10</td> <td>17</td> <td>18</td> <td>8</td> <td>7</td> <td>3</td> <td>11</td> <td>135</td> <td>11</td> <td>10</td> </tr> <tr> <td>Downloads: Gaming Action</td> <td>2</td> <td>4</td> <td>3</td> <td>2</td> <td>1</td> <td>1</td> <td>3</td> <td>27</td> <td>2</td> <td>2</td> </tr> <tr> <td>Grossing: Gaming</td> <td>1</td> <td>1</td> <td>2</td> <td>1</td> <td>8</td> <td>2</td> <td>1</td> <td>20</td> <td>1</td> <td>1</td> </tr> <tr> <td>Grossing: Gaming Action</td> <td>1</td> <td>1</td> <td>2</td> <td>1</td> <td>2</td> <td>1</td> <td>1</td> <td>4</td> <td>1</td> <td>1</td> </tr> </tbody> </table> Source: App Annie, As of 28th May 2021<blockquote><table><tbody><tr><td>印度</td><td>印尼</td><td>巴基斯坦</td><td>巴西</td><td>尼日利亚</td><td>孟加拉国</td><td>墨西哥</td><td>菲律宾</td><td>越南</td><td>泰国</td></tr><tr><td>下载：游戏</td><td>10</td><td>17</td><td>18</td><td>8</td><td>7</td><td>3</td><td>11</td><td>135</td><td>11</td><td>10</td></tr><tr><td>下载：游戏动作</td><td>2</td><td>4</td><td>3</td><td>2</td><td>1</td><td>1</td><td>3</td><td>27</td><td>2</td><td>2</td></tr><tr><td>票房：游戏</td><td>1</td><td>1</td><td>2</td><td>1</td><td>8</td><td>2</td><td>1</td><td>20</td><td>1</td><td>1</td></tr><tr><td>票房：游戏动作</td><td>1</td><td>1</td><td>2</td><td>1</td><td>2</td><td>1</td><td>1</td><td>4</td><td>1</td><td>1</td></tr></tbody></table>资料来源：App Annie，截至2021年5月28日</blockquote> The above charts are compiled from some of the most populated emerging market countries I could find, along with my free App Annie account. While new downloads might have reduced over the last two quarters from the pandemic boost last year, the numbers are still impressive and Free Fire remains the top-grossing game amongst most of the geographies above. Importantly, it is the consistency of these rankings over time.<blockquote>上面的图表是从我能找到的一些人口最多的新兴市场国家以及我的免费应用程序Annie帐户汇编的。虽然由于去年疫情的推动，新下载量在过去两个季度可能有所下降，但数字仍然令人印象深刻，Free Fire仍然是上述大多数地区中票房最高的游戏。重要的是，随着时间的推移，这些排名是一致性的。</blockquote> Going by the growth metrics, long-term engagement is likely to be sustained, but there should be a sequential slowdown in new user adds and incremental gross bookings in the coming months.This is consistent with what the management expects and reasonable given the reopening and saturation of the game across the global market. On the bright side, Digital Entertainment recorded an Adjusted EBITDA margin of 64% last quarter that should scale proportionately with gross bookings. After building out the game, there isn't too much in terms of costs to take away from the bottom line. Large sales and marketing expenditure isn't quite needed now that the game has global network effects. It's really about back-end, maintenance, and continued development work to keep evolving the already successful game and ecosystem.<blockquote>从增长指标来看，长期参与度可能会持续，但未来几个月新用户增加和总预订量应该会连续放缓。考虑到全球市场的重新开放和饱和，这符合管理层的预期，也是合理的。从好的一面来看，数字娱乐上季度调整后的 EBITDA 利润率为 64%，应与总预订量成比例增长。在构建了游戏之后，就成本而言，没有太多可以从底线中拿走的。既然游戏有全球网络效应，就不需要大量的销售和营销支出了。这实际上是关于后端、维护和持续开发工作，以保持已经成功的游戏和生态系统的发展。</blockquote> Shopee (E-Commerce)<blockquote>Shopee（电子商务）</blockquote> The following two charts present gross orders and gross merchandise value (GMV) for the e-commerce division.<blockquote>以下两张图表显示了电子商务部门的总订单和总商品价值（GMV）。</blockquote> <img src=\"https://static.tigerbbs.com/cb09b8563ac1df1a5d8e7458b30c3054\" tg-width=\"512\" tg-height=\"264\" referrerpolicy=\"no-referrer\"><blockquote></blockquote> <img src=\"https://static.tigerbbs.com/628c3b271ee17e9c430045d0f686f75c\" tg-width=\"512\" tg-height=\"264\">Source: Author, Data from Company Filings<blockquote>资料来源：作者，数据来自公司文件</blockquote> The trends are similar across both charts. Q2 2020 saw acceleration due to the pandemic, Q4 2020 saw a seasonal high, and Q1 2021 saw QoQ deceleration going out of the holiday season across most geographies. As Gross Orders have outpaced GMV, we can conclude that more people are ordering cheaper items on the platform on average. If we consider seasonality, the 5-6% QoQ growth in Q1 2021 isn't particularly concerning and we'll likely see a sequential pickup in the next quarter. It's fair to expect the reopening trend to put some downward pressure on growth but the long term feasibility of the platform has likely cemented itself for consumers. The convenience and product pricing on e-commerce is simply hard to compete with for brick &amp; mortar, and we're not going back to pre-pandemic levels of online retail again. The following earnings release excerpt provides some colour on e-commerce GAAP Revenue.<blockquote>两张图表的趋势相似。2020年第二季度因疫情而加速，2020年第四季度出现季节性高点，2021年第一季度在大多数地区的假期结束后环比减速。随着总订单量超过GMV，我们可以得出结论，平均有更多的人在平台上订购更便宜的商品。如果我们考虑季节性因素，2021 年第一季度 5-6% 的环比增长并不特别令人担忧，我们可能会在下一季度看到环比回升。公平地预计重新开放的趋势会给增长带来一些下行压力，但该平台的长期可行性可能已经巩固了消费者的地位。电子商务的便利性和产品价格根本无法与实体店竞争，我们不会再次回到大流行前的在线零售水平。以下财报发布摘录为电子商务 GAAP 收入提供了一些信息。</blockquote> GAAP revenue was US$922.3 million, up 250.4% year-on-year. GAAP revenue included US$715.9 million of GAAP marketplace revenue, up 285.0% year-on-year, and US$206.4 million of GAAP product revenue, up 167.1% year-on-year. Source:Q1 2021 Earnings Press Release Comparing the above information to the GMV chart, we can infer thatSales have substantially outpaced GMV growth. This indicates a very deliberate move by the company to increase their take rates in dominant geographies.Take rates are a function of the GMV and represent the proportion of the total GMV that makes it to revenues. As the standard consumer internet company goes, you expand and acquire customers at all costs, then you increase prices and get profitable after capturing a market and habituating consumers to your platform. Overall, the actions have also decreased Adjusted EBITDA losses substantially and that allows Sea to play the balancing cash flow act on demand.<blockquote>GAAP收入为9.223亿美元，同比增长250.4%。GAAP收入包括GAAP市场收入7.159亿美元，同比增长285.0%，GAAP产品收入2.064亿美元，同比增长167.1%。资料来源：2021 年第一季度收益新闻稿将上述信息与GMV图表进行比较，我们可以推断出销售额已大大超过 GMV 增长速度。这表明该公司采取了非常深思熟虑的举措，以提高其在主要地区的接受率。Take 费率是 GMV 的函数，代表总 GMV 占收入的比例。就像标准的消费互联网公司一样，你不惜一切代价扩张和获取客户，然后在占领市场并让消费者习惯你的平台后提高价格并获得利润。总体而言，这些行动还大幅减少了调整后 EBITDA 损失，并使 Sea 能够按需发挥平衡现金流法案。</blockquote> Both in Southeast Asia and in Taiwan, Shopee ranked first in the Shopping category by average monthly active users and total time spent in-app on Android for the first quarter of 2021, according to App Annie. In Indonesia, where Shopee further accelerated its year-on-year growth in gross orders, it continued to rank first by average monthly active users and total time spent in app on Android in the Shopping category for the first quarter of 2021, according to App Annie. Source:Q1 2021 Earnings Press Release From a high-level view, Southeast Asia &amp; Taiwan seem pretty much covered. However, within this region, Indonesia still presents the fiercest battleground for Shopee as it competes against the SoftBank-backed Tokopedia. The following charts show monthly website visits for both companies.<blockquote>根据 App Annie 的数据，2021 年第一季度，Shopee 在东南亚和台湾的平均月活跃用户和 Android 应用内花费的总时间均在购物类别中排名第一。根据 App Annie 的数据，在印度尼西亚，Shopee 的总订单量进一步加速了同比增长，2021 年第一季度，Shopee 在购物类别中的平均月活跃用户和在 Android 应用上花费的总时间继续排名第一。资料来源：2021 年第一季度收益新闻稿从高层来看，东南亚和台湾似乎几乎被覆盖了。然而，在这个地区，印度尼西亚仍然是Shopee最激烈的战场，因为它与软银支持的Tokopedia竞争。下图显示了两家公司每月的网站访问量。</blockquote> <img src=\"https://static.tigerbbs.com/49440f62634a1c3ccc9ebfdd0c7a33ba\" tg-width=\"481\" tg-height=\"289\">Source:Southeast Asia Map of eCommerce, iPrice Group<blockquote>资料来源：iPrice集团东南亚电子商务地图</blockquote> Monthly web visits from the iPrice Group show that Tokopedia saw more traffic (not necessarily sales) during the last quarter while it was behind during the last few. However, on mobile (App Store &amp; Android), Shopee is the undisputed leader in the Shopping category. This is reassuring since mobile e-commerce has been outpacing total e-commerce as a category in almost every geography across every platform.<blockquote>iPrice Group每月的网络访问量显示，Tokopedia在最后一个季度看到了更多的流量（不一定是销售额），而在最后几个季度却落后了。然而，在移动（App Store&amp;Android）上，Shopee是购物类别无可争议的领导者。这是令人放心的，因为移动电子商务作为一个类别，几乎在每个平台的每个地区都超过了总电子商务。</blockquote> <table> <tbody> <tr> <td>Indonesia Mobile Rankings</td> <td>Q1 20</td> <td>Q2 20</td> <td>Q3 20</td> <td>Q4 20</td> <td>Q1 21</td> </tr> <tr> <td>Shopee App Store</td> <td>1</td> <td>1</td> <td>1</td> <td>1</td> <td>1</td> </tr> <tr> <td>Shopee PlayStore</td> <td>1</td> <td>1</td> <td>1</td> <td>1</td> <td>1</td> </tr> <tr> <td>Tokopedia App Store</td> <td>2</td> <td>2</td> <td>2</td> <td>2</td> <td>2</td> </tr> <tr> <td>Tokopedia PlayStore</td> <td>3</td> <td>3</td> <td>4</td> <td>4</td> <td>4</td> </tr> </tbody> </table> Source: Southeast Asia Map of eCommerce, iPrice Group<blockquote><table><tbody><tr><td>印度尼西亚移动排名</td><td>Q1 20</td><td>第二季度20</td><td>第三季度 20</td><td>第四季度 20</td><td>Q1 21</td></tr><tr><td>Shopee应用商店</td><td>1</td><td>1</td><td>1</td><td>1</td><td>1</td></tr><tr><td>Shopee应用商店</td><td>1</td><td>1</td><td>1</td><td>1</td><td>1</td></tr><tr><td>Tokopedia应用商店</td><td>2</td><td>2</td><td>2</td><td>2</td><td>2</td></tr><tr><td>百科应用商店</td><td>3</td><td>3</td><td>4</td><td>4</td><td>4</td></tr></tbody></table>资料来源：iPrice Group 东南亚电子商务地图</blockquote> I would conclude that Tokopedia is a key competitor that needs to be watched closely and will prevent Shopee from exercising its take rates more liberally in the country. Furthermore, Indonesia represents the largest Southeast Asian market for e-commerce.Cross-pollination isn't just occurring across Sea's segments but also across Shopee's different e-commerce geographies.Profits from Shopee Thailand, for example, may be used to bring forth more competitive product pricing to Shopee Indonesia. Tokopedia is distinctly e-Commerce and limited to Indonesia, and likely doesn't have these internal cash generative advantages.<blockquote>我的结论是，Tokopedia 是一个需要密切关注的关键竞争对手，并将阻止 Shopee 在该国更自由地行使其收费标准。此外，印度尼西亚是东南亚最大的电子商务市场。异花授粉不仅发生在 Sea 的各个细分市场，也发生在 Shopee 不同的电子商务区域。例如，Shopee Thailand 的利润可能会被用来为 Shopee Indonesia 带来更具竞争力的产品价格。Tokopedia显然是电子商务，仅限于印度尼西亚，可能没有这些内部现金产生优势。</blockquote> Let's take a look at what's happening across the globe in Latin America. Shopee is growing like wildfire in Mexico and Brazil. The charts below represent recent data as of late May.<blockquote>让我们来看看拉丁美洲全球正在发生的事情。Shopee在墨西哥和巴西像野火一样发展。下图显示了截至五月下旬的最新数据。</blockquote> <img src=\"https://static.tigerbbs.com/e59030ed9023a1f492a597a9af00d646\" tg-width=\"640\" tg-height=\"247\">Source: App Annie, Rankings by Country in the \"Shopping\" category<blockquote>资料来源：App Annie，“购物”类别中按国家/地区排名</blockquote> Brazil and Mexico together make up for a population of ~330 million. The other e-commerce star in the category, MercadoLibre (MELI) ranks behind Shopee on Android for both Brazil and Mexico. The rankings depend on downloads instead of engagement, and MercadoLibre is often pegged to have a majority market share in Latin America as a whole (dominates Argentina). However, what the above alternative data above tell us is that Shopee has momentum in user share acquisition on an absolute basis. One can infer that more people are downloading Shopee in Mexico and Brazil as of late May compared to MercadoLibre at a faster rate. Higher downloads often translate to higher relatively higher market share gains.<blockquote>巴西和墨西哥加起来约有3.3亿人口。该类别的另一个电子商务明星MercadoLibre（MELI）在巴西和墨西哥的Android上都落后于Shopee。排名取决于下载量而不是参与度，MercadoLibre通常被认为在整个拉丁美洲拥有大部分市场份额（阿根廷占主导地位）。然而，上述备选数据告诉我们的是，Shopee在用户份额获取方面绝对有势头。可以推断，与MercadoLibre相比，截至5月底，墨西哥和巴西下载Shopee的人更多。较高的下载量通常会转化为相对较高的市场份额。</blockquote> Add all the Shopee geographies together and they represent a billion people and a combined GDP of $6.5T according to my calculations (Source for GDP:Worldometer). I reckon this is where to start when drawing up true long-term potential before narrowing down further.<blockquote>根据我的计算，将所有 Shopee 地区加起来，它们代表了 10 亿人和 6.5 万亿美元的总 GDP（GDP 来源：Worldometer).我认为这是在进一步缩小范围之前绘制真正的长期潜力时的起点。</blockquote> SeaMoney (Digital Financial Services)<blockquote>SeaMoney（数字金融服务）</blockquote> <ul> <li>Total Payment Volumes increased to $3.4B in Q1 21, from $1.0B during the same period last year</li> <li>Quarterly Paying Users increased to 26.1 million in Q1 21, from ~10 million during the same period last year</li> </ul> Source:Q1 2021 Earnings Release<blockquote><ul><li>21 年第一季度的总支付量从去年同期的 $1.0B 增加到 $3.4B</li><li>Q1 21 季度付费用户从去年同期的约 1000 万增至 2610 万</li></ul>资料来源：2021 年第一季度收益发布</blockquote> SeaMoney is the umbrella under which Sea Group operates multiple Fintech Apps including Shopee Pay. Current products include payments and payment processing, but if one were to look beyond into other Fintech Apps in China or the West, digital financial services tend to coalesce into super apps. For many people living in Southeast Asia, it isn't even about disruption but rather their first introduction to financial services of any sort. Unfortunately, a glance at the Fintech environment would leave any public market investor a bit confused.<blockquote>SeaMoney 是 Sea Group 运营包括 Shopee Pay 在内的多个金融科技应用程序的保护伞。目前的产品包括支付和支付处理，但如果超越中国或西方的其他金融科技应用，数字金融服务往往会融合成超级应用。对于许多生活在东南亚的人来说，这甚至不是颠覆，而是他们第一次接触任何形式的金融服务。不幸的是，金融科技环境的一瞥都会让任何公开市场投资者感到有点困惑。</blockquote> <img src=\"https://static.tigerbbs.com/09e8a02fd03188b0d9cb12841f889fe5\" tg-width=\"1280\" tg-height=\"501\">Source:FintechNews.SG<blockquote>资料来源：FintechNews.SG</blockquote> 26.1 million quarterly paying users (QPUs), and not monthly-PUs or daily-PUs for that matter doesn't give us much granularity in data or how the segment is truly performing. $3.4B in Transaction Payment Volume is somewhat impressive, considering the last quarter saw about $12.6B in GMV on Shopee. Ultimately, the broader adoption of SeaMoney by both merchants and consumers beyond the Shopee platform is important to catalyze network large scale effects. The greater the versatility of SeaMoney across instances in real-life, the better the hold the division would have over consumers. Longer-term, offering just payments is not enough. Credit, Debit, Investing, and other financial services, all in one app have been shown to differentiate the winners from the losers in geographies like China, or in the United States with Cash App by Square (SQ).<blockquote>2610 万季度付费用户 (QPU)，而不是按月付费用户或按日付费用户，这并不能让我们了解数据或该细分市场的真实表现。考虑到上一季度 Shopee 上的 GMV 约为 12.6B 美元，3.4B 美元的交易支付量有些令人印象深刻。最终，Shopee平台之外的商家和消费者更广泛地采用SeaMoney对于催化网络大规模效应非常重要。SeaMoney在现实生活中的多功能性越强，该部门对消费者的控制就越好。从长远来看，仅仅提供付款是不够的。信贷、借记、投资和其他金融服务，all in one App已被证明可以在中国等地区或美国通过Cash App by Square（SQ）区分赢家和输家。</blockquote> What can be said though, is that chances for continued growth, and winning market share are higher due to the group cross-pollination effects and network effects against Shopee customers. I would still see the segment through the eyes of an embedded option in the share price that would produce asymmetric reward if it does expand to more customers.<blockquote>不过，可以说的是，由于群体异花授粉效应和针对 Shopee 客户的网络效应，持续增长和赢得市场份额的机会更高。我仍然会从股价中嵌入的期权的角度来看待该细分市场，如果它确实扩展到更多客户，该期权将产生不对称的回报。</blockquote> The Runway Ahead<blockquote>前方的跑道</blockquote> The excerpts below were taken from a report published in late 2020 by Google, Temasek, and Bain &amp; Company. The report highlights internet spending forecasts over six major markets in Southeast Asia: Singapore, Indonesia, Philippines, Thailand, Malaysia, and Vietnam.<blockquote>以下摘录摘自谷歌、淡马锡和贝恩公司在2020年底发布的一份报告。该报告重点介绍了东南亚六个主要市场的互联网支出预测：新加坡、印度尼西亚、菲律宾、泰国、马来西亚和越南。</blockquote> <img src=\"https://static.tigerbbs.com/bffb6329895d550a13b311bb474fde85\" tg-width=\"640\" tg-height=\"222\" referrerpolicy=\"no-referrer\"><blockquote></blockquote> <img src=\"https://static.tigerbbs.com/6a66aadbe2d042623e0efa580879f9f2\" tg-width=\"640\" tg-height=\"335\">Source:e-Conomy SEA 2020; by Google, Temasek, and Bain &amp; Company<blockquote>资料来源：电子经济海2020；作者：谷歌、淡马锡和贝恩公司</blockquote> As a whole, the internet economy in these countries is expected to compound at a CAGR (Compound Annual Growth Rate) of 24%, almost tripling from $105B in GMV in 2020 to $309B in 2025. This provides a sense of scale for the region and the internet opportunity that Sea currently operates in as a leader. Note that these numbers exclude Taiwan and Latin America.<blockquote>总体而言，这些国家的互联网经济预计将以24%的CAGR（复合年增长率）复合，从2020年的1050亿美元的GMV增长到2025年的3090亿美元，几乎增长了两倍。这为该地区提供了规模感，也为 Sea 目前作为领导者运营的互联网机会提供了机会。请注意，这些数字不包括台湾和拉丁美洲。</blockquote> For Digital Entertainment, Garena's Free Fire market appears to be a lot closer to saturation considering it is already one of the highest-grossing mobile games on the planet. Other Garena endeavours have a chance of success though I'd argue that \"Free Fire\"-like success is hard to come by especially in mobile gaming. Digital Financial Services is still early to call at least until it achieves broader mass adoption across the region. 26 million paying users is significant, though we'll have to give the business time until we can call it a meaningful sales contributor that in turn drives the stock price. As of now, it's a cash burn.<blockquote>对于数字娱乐来说，Garena的Free Fire市场似乎更接近饱和，因为它已经是这个星球上收入最高的手机游戏之一。Garena的其他努力也有成功的机会，尽管我认为“自由射击”式的成功很难获得，尤其是在移动游戏中。数字金融服务对看涨期权来说还为时尚早，至少在它在整个地区实现更广泛的大规模采用之前是如此。2600 万付费用户意义重大，尽管我们必须给企业时间，直到我们能够看涨期权成为有意义的销售贡献者，进而推动股价。到目前为止，这是一个烧钱的过程。</blockquote> That leaves e-Commerce as the main sales driver for the company in the next 2-3 years. Here are some country-specific forecasts for e-Commerce by the same source.<blockquote>这使得电子商务成为公司未来2-3年的主要销售驱动力。以下是同一来源对电子商务的一些特定国家的预测。</blockquote> <img src=\"https://static.tigerbbs.com/b13ad7630877eaae1221848e7aa7d6e3\" tg-width=\"640\" tg-height=\"321\">Source:e-Conomy SEA 2020, Local Highlights<blockquote>资料来源：电子经济海洋2020，本地亮点</blockquote> As one would expect, Indonesia is the largest market. Vietnam is expected to compound at the fastest rate over the next few years. It's important to note that while the CAGRs are drawn in the 20-30% range, 2021 will see the highest rate while 2025 will see the lowest. 40%+ YoY SEA GMV growth for 2021 is quite likely in my opinion while 2025 could be closer to 15%.<blockquote>正如人们所料，印度尼西亚是最大的市场。预计越南将在未来几年以最快的速度复合。值得注意的是，虽然CAGR在20-30%范围内，但2021年将是最高的，而2025年将是最低的。我认为，2021 年海上 GMV 同比增长很可能超过 40%，而 2025 年可能接近 15%。</blockquote> The above chart uses GMV or Gross Merchandise Value. As discussed earlier, sales are a function of the take rate and the GMV. The take rate increases, the sales increase. Sea does this by dominating geographies and then deliberately increasing the take rate when network effects or the habituation of consumers on Shopee works at scale. Therefore, Sea's sales growth is set to outpace GMV expansion, especially when they widen their lead in a market. Given Latin America is also experiencing rapid Shopee adoption, it is reasonable to expect hyper-growth in the e-Commerce segment for years. The company expects 112% YoY growth for Shopee in FY2021 at the midpoint of their guidance (Source:Q4 20 Transcript).<blockquote>上图使用GMV或商品总价值。如前所述，销售额是接受率和GMV的函数。接受率增加，销售额增加。Sea 通过控制地理位置来做到这一点，然后在网络效应或消费者对 Shopee 的习惯大规模发挥作用时故意提高接受率。因此，Sea 的销售增长将超过 GMV 的扩张，尤其是当他们扩大市场领先优势时。鉴于拉丁美洲也正在经历Shopee的快速采用，有理由预期电子商务领域未来几年将出现高速增长。该公司预计 Shopee 2021 财年同比增长 112%，处于其指引的中点（资料来源：2020 年第四季度成绩单).</blockquote> Weave the above pieces together, Sea has an immense growth runway. The e-Commerce opportunity indicates that the company can theoretically be in hyper-growth mode for another 2-3 years, well into 2023.<blockquote>将上述部分编织在一起，Sea 拥有巨大的增长跑道。电子商务机会表明，该公司理论上可以在 2023 年之前再处于 2-3 年的高速增长模式。</blockquote> With an established competitive moat, if there's one company to bet on to capitalize and win on the $300B internet GMV opportunity for 2025 (not counting Latin America &amp; Taiwan), Sea seems to be it. I expect the management will also come up with newer verticals that could expand their TAM further. Online in-app investing? travel? TV and movies? Streaming? With network effects this good, they have an unfair advantage. The management has already executed across multiple businesses and seems to deeply understand how the emerging market consumer thinks. They've also displayed evidence of tailoring apps, like Free Fire, to individual geography tastes to maximize execution. Let's look at the financials and valuation multiples to see how much of their future success is already factored in.<blockquote>有了既定的竞争护城河，如果有一家公司可以押注于利用并赢得 2025 年 3000 亿美元的互联网 GMV 机会（不包括拉丁美洲和台湾），Sea 似乎就是其中之一。我预计管理层也会提出新的垂直领域，进一步扩大他们的TAM。在线应用内投资？旅行？电视和电影？流动？网络效应这么好，他们就有了不公平的优势。管理层已经执行了多项业务，似乎深刻理解新兴市场消费者的想法。他们还展示了根据个人地理口味定制应用程序的证据，如Free Fire，以最大限度地提高执行力。让我们看看财务状况和估值倍数，看看他们未来的成功在多大程度上已经被考虑在内。</blockquote> Group Financial Overview<blockquote>集团财务概览</blockquote> I previously mentioned the cash flow valley of death and how segments balance out to achieve cash flow generative growth. The company reports Adjusted EBITDA figures by segment that display similar trends. The \"adjustments\" are quite substantial compared to GAAP metrics, but they're a reasonable indicator after removing stock-based compensation, convertible interest payments, and non-core profitability generation. We're looking long-term here, so the game becomes comparing profitability to itself across time rather than other businesses. I'm more interested in trends and margin expansion rather than absolute values for now. The following chart shows how the breakdown balances out.<blockquote>我之前提到过现金流死亡谷以及各部门如何平衡以实现现金流生成增长。该公司报告了按部门划分的调整后 EBITDA 数据，显示了类似的趋势。与 GAAP 指标相比，这些“调整”相当可观，但在去除基于股票的薪酬、可转换利息支付和非核心盈利能力后，它们是一个合理的指标。我们在这里着眼于长远，因此游戏变成了将盈利能力与自身进行比较，而不是与其他业务进行比较。目前，我对趋势和利润率扩张更感兴趣，而不是绝对值。下图显示了细分是如何平衡的。</blockquote> <img src=\"https://static.tigerbbs.com/2d09aa44220209f2c3a08bdf77363fee\" tg-width=\"640\" tg-height=\"347\">Source: Author, Data from Company Filings<blockquote>资料来源：作者，数据来自公司文件</blockquote> The trends were seen above follow the cash flow valley diagram. Digital Entertainment is funding Shopee and SeaMoney, and the net result (the bright pink line) is Group Adjusted EBITDA positive for the past four quarters. Going forward, I expect e-Commerce to pass its valley shortly as sales growth decelerates, and expect digital financial services to continue to burn cash at higher amounts sequentially. The group's total financial performance is encapsulated in the chart below:<blockquote>上面看到的趋势遵循现金流谷图。Digital Entertainment 正在为 Shopee 和 SeaMoney 提供资金，净结果（亮粉色线）是过去四个季度的集团调整后 EBITDA 为正值。展望未来，我预计随着销售增长放缓，电子商务很快就会度过低谷，并预计数字金融服务将继续以更高的速度消耗现金。本集团的整体财务表现概括于下图：</blockquote> <img src=\"https://static.tigerbbs.com/50cdf1dd4ad0cc063ae074d6bec713bd\" tg-width=\"605\" tg-height=\"352\">Source: Author, Data from Company Filings<blockquote>资料来源：作者，数据来自公司文件</blockquote> Gross Profits have risen due to higher take rates in e-Commerce and improving incremental margins on Digital Entertainment. These margins would come under some pressure as Shopee will outpace Garena, and the lower-margin e-commerce will make a larger proportion of the gross profit mix. Adjusted EBITDA is under control, and while the company is unprofitable on a GAAP basis, I believe it is still fair given that the top-line is growing at triple-digit percentages. Total Revenue for Q4 has grown 12.6% QoQ and 146.7% YoY. On an LTM basis, Revenues have grown 113.7% YoY. With a long-runway ahead, and with the currently phenomenal product and sales execution, Sea Group is a financially healthy company.The profit tradeoff for growth is fair, even though it's a rarity given the sheer scale of the business.<blockquote>由于电子商务的较高采用率和数字娱乐增量利润率的提高，毛利润有所上升。这些利润率将面临一些压力，因为 Shopee 将超过 Garena，而利润率较低的电子商务将在毛利润组合中占据更大的比例。调整后的 EBITDA 已得到控制，虽然该公司按 GAAP 计算尚未盈利，但考虑到营收正以三位数的百分比增长，我相信这仍然是公平的。第四季度总收入环比增长12.6%，同比增长146.7%。按 LTM 计算，收入同比增长 113.7%。凭借漫长的跑道，以及目前非凡的产品和销售执行力，Sea Group 是一家财务状况良好的公司。以利润换取增长是公平的，尽管考虑到业务的庞大规模，这种情况很少见。</blockquote> Investors would take some relief in the fact that the company has amassed ~$5.8B in Cash &amp; Equivalents on its balance sheet that would fund losses for some time. If need be, there is a profit switch in Shopee that the company can activate that will result in larger take rates to boost profitability. Sellers on the platform may have no choice in such a situation, considering the breadth, reach, and engagement on the Shopee platform and would go along with the asking price. There is a substantial moat here and the resulting pricing power can be exercised on demand to boost profitability. This isn't new information; Amazon's (AMZN) US e-commerce for example has made similar moves.<blockquote>投资者会松一口气，因为该公司在其资产负债表上积累了约 5.8B 美元的现金及等价物，这将为一段时间的损失提供资金。如有必要，Shopee 中有一个利润开关，该公司可以激活该开关，这将导致更高的采用率，以提高盈利能力。考虑到 Shopee 平台的广度、影响力和参与度，平台上的卖家在这种情况下可能别无选择，并且会按照要价行事。这里有一个巨大的护城河，由此产生的定价权可以按需行使，以提高盈利能力。这不是新信息；例如，亚马逊（AMZN）的美国电子商务也采取了类似的举措。</blockquote> Valuation<blockquote>估值</blockquote> <img src=\"https://static.tigerbbs.com/1c5cf2d88f832fa4e10dd048d0492f1d\" tg-width=\"640\" tg-height=\"331\">Source: Koyfin<blockquote>资料来源：Koyfin</blockquote> Group Gross Profits are at the 30% range and Shopee specific metrics are expectedly lower. So a 23.7x LTM EV/S multiple is obviously huge. When contextualizing growth prospects and the excellent competitive positioning, the forward EV/S metrics are far more reasonable. According to the Koyfin database, the analyst consensus forward multiples are as follow:<blockquote>集团毛利润在30%范围内，Shopee的具体指标预计会更低。因此，23.7倍的LTM EV/S倍数显然是巨大的。当结合增长前景和出色的竞争定位时，远期EV/S指标要合理得多。根据 Koyfin 数据库，分析师共识远期倍数如下：</blockquote> <ul> <li>FY 2021 EV/S of 16.0x</li> <li>FY 2022 EV/S of 11.1x</li> <li>FY 2023 EV/S of 8.3x</li> </ul> Source: Koyfin<blockquote><ul><li>2021 财年 EV/S 为 16.0 倍</li><li>2022 财年 EV/S 为 11.1x</li><li>2023 财年 EV/S 为 8.3 倍</li></ul>资料来源：Koyfin</blockquote> Analysts have historically been on the side of conservatism for almost every high-growth tech company. Sea Group has almost always beaten its revenue figures though they usually fall slightly short on profitability. The 8.3x for 2023 means it's valued on Tencent-like multiples (adjusted for lower gross profits) but in three years. It is indeed a baby Tencent, and I would also argue that&nbsp;OTCPK:TCEHY&nbsp;itself is somewhat undervalued given the low sentiment surrounding regulations and foreign investments in Chinese tech. Are these multiples reasonable? And where is the upside? I believe SE's current price fair, but the upside will have to come from sustained revenue beats, continued product developments, and mass-scale user acquisition. Multiple compression may need to counter share price dilution, and then actually give us a reasonable rate of return. This is a situation where the following wisdom is applicable in my opinion:<blockquote>对于几乎所有高增长科技公司，分析师历来都站在保守一边。Sea Group 几乎总是超出其收入数据，尽管它们通常略低于盈利能力。2023 年的 8.3 倍意味着它的估值与腾讯控股类似（根据较低的毛利润进行调整），但需要三年时间。它确实是一个婴儿腾讯控股，我还认为，鉴于围绕中国科技的监管和外国投资的低迷情绪，OTCPK:TCEHY 本身在某种程度上被低估了。这些倍数合理吗？好处在哪里？我认为 SE 目前的价格是合理的，但上涨空间必须来自持续的收入增长、持续的产品开发和大规模用户获取。多重压缩可能需要对抗股价稀释，然后实际给我们一个合理的回报率。在我看来，这是一种适用以下智慧的情况：</blockquote> It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price-Warren Buffett In my experience, when the quality of the company shines for a fair price, it's still worth an investment. Winners continue to win, and Sea Group is a rockstar business factoring in most qualitative aspects.Given the visionary management (Forrest Li &amp; Co.) and what they've achieved so far, I'd put the odds in their favour.<blockquote>以合理的价格收购一家优秀的公司，远比以优惠的价格收购一家优秀的公司要好得多——沃伦·巴菲特根据我的经验，当公司的质量以合理的价格大放异彩时，它仍然值得投资。赢家不断获胜，Sea Group 在大多数定性方面都是一家摇滚明星企业。考虑到富有远见的管理层（Forrest Li&amp;Co.）和他们迄今为止所取得的成就，我认为胜算对他们有利。</blockquote> Speaking of odds, there are potential catalysts that could pull the future towards us. One would hypothesise that Shopee winning in Indonesia on a more definitive basis would result in sales getting a boost from a strategic take-rate expansion. Across the planet, the Latin American story is looking impressive and shouldn't be underestimated given the size of Brazil and Mexico. That's an additional 50% e-Commerce TAM compared to Southeast Asia. SeaMoney still has a lot to prove but the network effects from Shopee should help sustain an onboarding of customers. The overall business has optionality. By that I mean, embedded options that could be triggered by a few developments and unlock share price appreciation. These are worth a premium.<blockquote>说到几率，有潜在的催化剂可以将未来拉向我们。有人可能会假设，Shopee 在印度尼西亚以更明确的方式获胜，将导致销售额从战略性上座率扩张中获得提振。在全球范围内，拉丁美洲的故事看起来令人印象深刻，考虑到巴西和墨西哥的规模，不应被低估。与东南亚相比，电子商务TAM增加了50%。SeaMoney 仍有很多东西需要证明，但 Shopee 的网络效应应该有助于维持客户的加入。整体业务有可选择性。我的意思是，一些事态发展可能会触发并解锁股价升值的嵌入式期权。这些值得溢价。</blockquote> I'm currently long SE. I reckon there's still substantial outperformance potential over benchmarks though the easy alpha potential like we saw in 2020 is unlikely to present itself ever again. The bull thesis is too obvious now, everyone knows it, but it should still play out with alpha in my opinion. Every tech hedge fund in the world seems to be holding SE, and I agree with them. On the other hand, let's look at risks.<blockquote>我现在很长。我认为，尽管我们在 2020 年看到的轻松 alpha 潜力不太可能再次出现，但仍有很大的超越基准的潜力。牛市论点现在太明显了，大家都知道，但在我看来还是应该和阿尔法一起上演。世界上每个科技对冲基金似乎都持有SE，我同意他们的观点。另一方面，我们来看看风险。</blockquote> Risks<blockquote>风险</blockquote> <ul> <li>Free Fire Concentration:The mobile gaming industry is fast, dynamic, and always changing. The next great game is always around the corner and it's entirely possible that Free Fire's popularity fades and the accompanying cash generation dries up. I believe this risk has reduced over the last year, but it's still worth considering.</li> <li>Competition:Tokopedia in Indonesia, MercadoLibre in Latin America, and other internet businesses like Grab &amp; Gojek. There's plenty of competition at multiple fronts throughout the ecosystem.</li> <li>Overly aggressive expansion strategy:Sea Group's expansion into 7-8 countries and counting demonstrates a uniquely aggressive growth strategy. While their approach has worked out so far, it may work against them in the future. Knowing when to give up in a market that doesn't play out can stop unnecessary cash burn when the prize isn't significant enough.</li> <li>Systemic Risks:As a GAAP net loss business, Sea Group is subject to higher volatility, deep drawdowns, and sector/style selloffs. The sell-off in March is a recent example.</li> <li>Macro:Regulations and geopolitical factors in the emerging market geographies are typically more volatile than those in the US. A variety of macro risks and F/X risks are present at large.</li> </ul> Ending Notes<blockquote><ul><li>自由火力浓度：移动游戏行业是快速、动态且不断变化的。下一个伟大的游戏总是在拐角处，完全有可能Free Fire的受欢迎程度消退，随之而来的现金产生枯竭。我相信这种风险在去年有所降低，但仍然值得考虑。</li><li>竞争：印度尼西亚的Tokopedia、拉丁美洲的MercadoLibre以及Grab&amp;Gojek等其他互联网企业。在整个生态系统的多个方面都有很多竞争。</li><li>过于激进的扩张战略：Sea Group 已扩展到 7-8 个国家并不断增加，这表明了其独特的积极增长战略。虽然他们的方法到目前为止已经奏效，但在未来可能会对他们不利。当奖金不够丰厚时，知道何时放弃可以阻止不必要的现金消耗。</li><li>系统风险：作为 GAAP 净亏损业务，Sea Group 会受到更高的波动性、深度回撤和行业/风格抛售的影响。三月份的抛售就是最近的一个例子。</li><li>宏：新兴市场地区的监管和地缘政治因素通常比美国更具波动性。各种宏观风险和外汇风险普遍存在。</li></ul>结尾附注</blockquote> Concerns about overvaluation are perhaps warranted on a short-term outlook. In this situation, I do not have a strong near-term opinion but instead, harbour conviction in the company's long-term prospects. If one were to think in years rather than months, it is apparent to me that no competitor comes close to Sea Group in its chances for dominating e-commerce market share in most of its operating geographies. Indonesia is a key country to watch as Tokopedia is still putting up a fight. I'd put the odds on Sea since Tokopedia is a vanilla e-commerce player and doesn't have the scale and cross-pollination advantage unless they merge with another giant. Latin America is also looking like it will be a meaningful push to the top-line if not near term profitability. With excellent execution, Sea Group is leveraging its competitive positioning and is winning more often than not. The cross-pollination effect is a key advantage for internal cash generation and will help sustain the relentless growth as the business captures the massive opportunity that remains.<blockquote>从短期来看，对估值过高的担忧或许是有道理的。在这种情况下，我对公司的长期前景没有强烈的看法。如果用几年而不是几个月来思考，在我看来，显然没有任何竞争对手能够在其大部分运营地区主导电子商务市场份额方面与 Sea Group 相提并论。印度尼西亚是一个值得关注的关键国家，因为Tokopedia仍在努力。我会把胜算押在海上，因为Tokopedia是一家普通的电子商务公司，除非他们与另一家巨头合并，否则没有规模和异花授粉优势。拉丁美洲看起来也将是对营收的有意义的推动，如果不是短期盈利的话。凭借出色的执行力，Sea Group 正在利用其竞争定位，并且经常获胜。异花授粉效应是内部现金产生的一个关键优势，并将有助于在业务抓住剩余的巨大机会时维持持续增长。</blockquote> I imagine many experienced investors that caught the Amazon (AMZN) train early would look back on their investment as a staple component of their portfolio over the years. In my opinion, Sea Group offers a similar proposition a bit earlier in its lifecycle. Currently trading at a market cap of $130B, Sea can theoretically double in a few years once again in my opinion. Tencent in a duopolistic landscape (withBABA) features a $748B market cap across a 1.3 billion Chinese population. SE can go a third of that in a few years with a monopolistic position in Southeast Asia, scaling to a 1 billion strong emerging market population. This isn't a pure alpha opportunity as multiples have substantially expanded, but I would ballpark the company to deliver a 20%+ compounded return for investors that continue to hold it for a few years.I'm long SE.<blockquote>我想，许多早期搭上亚马逊 (AMZN) 列车的经验丰富的投资者会回顾他们多年来的投资，将其视为其投资组合的主要组成部分。在我看来，Sea Group 在其生命周期的早期提出了类似的主张。Sea 目前的市值为 130B 美元，在我看来，理论上几年内可以再次翻一番。双寡头格局中的腾讯控股 (withBABA) 在 13 亿中国人口中拥有 7480 亿美元的市值。凭借在东南亚的垄断地位，SE 可以在几年内将其增加到三分之一，并扩展到拥有 10 亿强大的新兴市场人口。这不是一个纯粹的阿尔法机会，因为市盈率已经大幅扩大，但我认为该公司将为继续持有该公司几年的投资者提供 20% 以上的复合回报。我是龙瑟。</blockquote> *****<blockquote>*****</blockquote> Thanks for reading! On a separate note, I'm excited to announce that I will be releasing a Marketplace subscription service soon called The Abstract Portfolio. High growth tech investing can involve a lot of fragmented information, sentiment, and noise. The Abstract Portfolio aims to bring focus and clarity by weaving together what matters and filtering out what doesn't. The service will feature a concentrated portfolio of cherry-picked stocks backed by rigorous fundamental research, assembled to deliver high absolute returns. Stay tuned!<blockquote>感谢阅读!另外，我很高兴地宣布，我将很快发布一项名为抽象投资组合的市场订阅服务。高增长的科技投资可能涉及大量碎片化的信息、情绪和噪音。抽象作品集旨在通过将重要的东西编织在一起，过滤掉不重要的东西来带来焦点和清晰。该服务将提供由严格基本面研究支持的精选股票投资组合，以提供高绝对回报。敬请期待!</blockquote>\n<div class=\"bt-text\">\n\n\n 来源：<a href=\"https://seekingalpha.com/article/4432517-analyzing-sea-limiteds-relentless-growth\">seekingalpha</a>\n为提升您的阅读体验，我们对本页面进行了排版优化\n\n\n</div>\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"SE":"Sea Ltd"},"source_url":"https://seekingalpha.com/article/4432517-analyzing-sea-limiteds-relentless-growth","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1100705667","content_text":"Summary\n\nThis article focuses on the growth engine that enables Sea Group. I provide a high-level overview and dive deeper into each operating segment.\nThe company has a significant advantage through segments that cross-pollinate each other with cash. Garena is currently funding the growth of Shopee and SeaMoney. This is a key moat contributor.\nShopee continues to be the key top-line driver with substantial Gross Merchandise Value growth forecasted in Southeast Asia. Consequently, increasing take rates will likely lead to even higher revenue growth.\nLooking at overall online spending, the six largest Southeast Asian countries are forecasted to grow from $100B GMV in 2020 to $300B GMV in 2025. Sea stands to benefit across the board.\nAt an FY2023 EV/S of ~8.3x, Sea Group is fairly priced for an investment. It is a long-term conviction \"buy and hold\" for me.\n\nPhoto by Wachiwit/iStock Editorial via Getty Images\nSea Group (NYSE:SE) is still running in hyper-growth mode (>100% YoY last quarter and on a last-twelve-month basis).\nIt's been over a year since I first wrote about Sea on Seeking Alpha. The company's rise has been staggering and the business has continued to surpass most expectations, with the stock returning over 300% in the last 12 months. I'd like to use this article as an opportunity to dive into what makes such growth at a ~$120B market cap possible and put forward my opinion on why the company is positioned to win more in the coming years. While a lot of alpha has been captured in the past, I still expect substantial broad index outperformance going forward over the long term. I'm long SE.\nRecap\nHere's a quick recap of what the company constitutes. Sea Group is a Singapore-based consumer internet company that has three major divisions: Digital Entertainment, E-Commerce, and Digital Financial Services. In layman's terms, think of it as a smaller and younger version of Tencent (OTCPK:TCEHY) with a Southeast Asia focus.\nSource: Author, Logos from Sea Group Media Resources\nGarena\nTheir Digital Entertainment arm known as \"Garena\" began as a third party game licensor and operator for popular online games (mostly by Tencent) for the South East Asia region. It consequently grew into an independent mobile game developer, and they now operate one of the most widely played mobile games on the planet, Free Fire, which has about 650 million quarterly active users worldwide. Free Fire is a battle-royale style multiplayer game, optimized to run smoothly on mobile phones with lower computing power specifications.The game generates revenue primarily from in-app purchases. It also features social media aspects, and more recently, an e-sports ecosystem built around it to host global tournaments streamed across the world. The cohesive gaming, social media, and entertainment aspects have led it to be highly engaging and relatively sticky with low churn as far as mobile games go.\nShopee\nShopee is the leading e-commerce platform in Southeast Asia + Taiwan, spanning about 7 countries with a population of over 600 million people. They also have a large presence in Latin America, including Mexico and Brazil (add another 300 million population). The app facilitated ~$12.6B in Gross Merchandise Value (GMV) last quarter. Almost all the markets it operates in features rising middle classes, rapid digital consumerization, and strong GDP growth rates. These geographies have also been historically underpenetrated on the digital front, and are currently experiencing consumer internet adoption at a higher rate than their developed country counterparts. The pandemic catalyzed the seemingly inevitable trend of e-commerce adoption.\nSeaMoney\nThis is Sea Group's \"Digital Financial Services\" (Fintech) arm. SeaMoney includes a digital wallet, payments processing, credit offerings, and other financial services. The segment had over 26 million quarterly paying users with over $3.4B in total payment volume facilitated last quarter. It is Sea Group's youngest division but arguably presents the largest opportunity for the company given that most of the Southeast Asian population has historically been underbanked. Theoretically, investments, loans, credit, debit, and insurance are all potential pieces that can weave together under a unified consumer financial services ecosystem.\nTo summarize, Sea Group is a consumer internet titan with an ecosystem of high growth business divisions that are in total, likely touching over a billion people worldwide. On an LTM basis, the company's combined revenue grew 113.7% YoY. Sea is serving emerging markets that are experiencing internet adoption at accelerated rates, and is ballooning into a Tencent-like internet beast (consequently, they're Tencent-backed as well). A key factor in an investment consideration, is, of course, growth going forward. In the next few sections, I attempt to deconstruct growth using readily available-reported metrics and alternative data to make inferences on prospects.\nGroup Growth Through Cross-Pollination\nBig growth requires cash. Chasing an underpenetrated e-commerce opportunity spanning 100s of millions of consumers requires a lot of cash. Sea has executed well in raising capital and putting it to work for growth, often playing its cards close to the chest pre-2020. The secret sauce for effective cash utilization, however, lies in the company's three-headed ecosystem structure. Shopee's growth would not be possible without the preceding success of Garena. And it's fair to say that SeaMoney's odds of success are substantially better because of Shopee's proliferation. The following diagram explains this.\nSource: Author, Logos from Sea Group Media Resources\nA popular concept in venture capital is the \"Valley of Death\". A freshly funded startup enterprise tends to burn cash to invest in product development, overhead, sales, etc. It continues to burn cash until it finds product-market fit, and revenues eventually grow large enough to make the system work and turn the company cash flow generative. Businesses are vulnerable from a financial standpoint during the cash burn and have to beat the clock as their limited cash pours out rapidly until sales balance out expenditure. Many seed-stage startups just die due to this. Since venture capital proliferated in the last two decades and access to private funding has supplied enormous cash ammunition to growth businesses post product-market fit, the burn phase has extended to the public markets as well. If a public company's strategy doesn't work, it tends to downsize, get mildly profitable at modest growth rates, and turn into an acquisition target. Alternatively, it may collect in the vast land of unfulfilled public tech stocks. That's the anatomy of a modern tech company in a nutshell.\nExpanding upon this concept, Sea Group isn't one company. It's a lot like three companies. As of 2021, Garena is well out of the cash flow valley of death, Shopee is burning big cash but is seemingly at a trough, and SeaMoney is just getting started. Proceeds from mature segments like Garena are used to pollinate growth in segments that have lower market penetration and longer growth runways (like Shopee & SeaMoney).In totality, Sea Group is an ecosystem that continues to evolve with the next big company still embedded within, still in the making, all the time.What's impressive is that Shopee's market potential is larger than Garena's, and SeaMoney has an even larger theoretical market though any success might be early to call. The access to cash makes Sea Group's growth outright suffocating for competitors because individual non-ecosystems simply cannot compete on pricing, marketing budgets, and moderate economies of scale in the case of e-commerce. That's not to take away from Sea's excellent product and sales execution anyway. The following sections break down the three sub-companies and draw inferences from their growth metrics.\nGarena (Digital Entertainment)\nSource: Author,Data from Company Filings\nThe charts above pertain to the Digital Entertainment segment, with the marked lines displaying YoY (Year-over-Year), and QoQ (Quarter-over-Quarter) percentage growth. Gross Bookings are the key top-line metric as they represent revenues that are yet to be recognized on the GAAP front. Due to the nature of in-app purchases and other payments made on apps like Free Fire etc., there's a fairly substantial difference between the two. Previously reported as Adjusted Revenues, Gross Bookings have held strong and have recently recorded 10% QoQ growth for the first quarter even though the pandemic has been easing off with a reopening trend. Q1-Q3 2020 saw rapid growth, while the last few quarters have tapered down to levels that are seemingly more muted. This should be expected to continue.\nIt is worth mentioning how Free Fire has stuck around instead of temporarily leading top mobile gaming charts like most other games. In the gaming world, you have temporarily viral games, and then you have games that have a dedicated following across millions of users that evolve and provide engagement over sustained periods of time. The latter includes Call of Duty, PUBG, League of Legends, and Fortnite to name a few. Ultimately, the revenues of these games are predictable and sticky enough. It appears as though Free Fire has joined this group.\nThe way Free Fire was built from the ground up is relatively contrarian. It's optimized to work on cheaper Android-powered smartphones instead of consoles and dedicated devices that are often seen as staple purchases for many gamers in developed countries. Getting a Switch, Xbox, or PC for most people in emerging markets is a serious expense. With Free Fire, you can get away with what you already have in India, Brazil, Mexico, and Indonesia. All you need is a smartphone and you're getting bang for your buck gaming and entertainment. This aspect has made it a perfect emerging market game.While most of the industry was focused on higher ticket experiences, Garena's contrarian outlook on making a game specifically for ignored categories of mobile players has helped it succeed.\n\nSource: Author, Data from Company Filings\nDespite going after large populations of price-sensitive emerging market gamers, we see a surprising number of users actually paying for in-app purchases every quarter. QPU growth has outpaced QAU growth, with a larger proportion of the overall user mix trending towards paying users over time (11.4%, 12.0%, and 12.3% respectively for the last three quarters). This is key for the division's bookings and revenues. About a year ago, I expressed concern regarding the over-reliance on Free Fire as a sustainable cash source. I questioned whether it was truly here to stay and won't be replaced by the next hot game. This concern was abated when I learned that the e-sports events were amassing millions of viewers, the game continued to evolve with seasons and geography-specific features, and the social media angle that resulted in network effects across players.It's impressive enough for a game to go to #1, but to stay in the top charts for 2-years running requires some excellent execution.\nHere's a table of Play Store rankings for the \"Games: Action\" category. I've included the Play Store since the majority of emerging market users are on Android as opposed to iOS.\n\n\n\nIndia\nIndonesia\nPakistan\nBrazil\nNigeria\nBangladesh\nMexico\nPhilippines\nVietnam\nThailand\n\n\nDownloads: Gaming\n10\n17\n18\n8\n7\n3\n11\n135\n11\n10\n\n\nDownloads: Gaming Action\n2\n4\n3\n2\n1\n1\n3\n27\n2\n2\n\n\nGrossing: Gaming\n1\n1\n2\n1\n8\n2\n1\n20\n1\n1\n\n\nGrossing: Gaming Action\n1\n1\n2\n1\n2\n1\n1\n4\n1\n1\n\n\n\nSource: App Annie, As of 28th May 2021\nThe above charts are compiled from some of the most populated emerging market countries I could find, along with my free App Annie account. While new downloads might have reduced over the last two quarters from the pandemic boost last year, the numbers are still impressive and Free Fire remains the top-grossing game amongst most of the geographies above. Importantly, it is the consistency of these rankings over time.\nGoing by the growth metrics, long-term engagement is likely to be sustained, but there should be a sequential slowdown in new user adds and incremental gross bookings in the coming months.This is consistent with what the management expects and reasonable given the reopening and saturation of the game across the global market. On the bright side, Digital Entertainment recorded an Adjusted EBITDA margin of 64% last quarter that should scale proportionately with gross bookings. After building out the game, there isn't too much in terms of costs to take away from the bottom line. Large sales and marketing expenditure isn't quite needed now that the game has global network effects. It's really about back-end, maintenance, and continued development work to keep evolving the already successful game and ecosystem.\nShopee (E-Commerce)\nThe following two charts present gross orders and gross merchandise value (GMV) for the e-commerce division.\n\nSource: Author, Data from Company Filings\nThe trends are similar across both charts. Q2 2020 saw acceleration due to the pandemic, Q4 2020 saw a seasonal high, and Q1 2021 saw QoQ deceleration going out of the holiday season across most geographies. As Gross Orders have outpaced GMV, we can conclude that more people are ordering cheaper items on the platform on average. If we consider seasonality, the 5-6% QoQ growth in Q1 2021 isn't particularly concerning and we'll likely see a sequential pickup in the next quarter. It's fair to expect the reopening trend to put some downward pressure on growth but the long term feasibility of the platform has likely cemented itself for consumers. The convenience and product pricing on e-commerce is simply hard to compete with for brick & mortar, and we're not going back to pre-pandemic levels of online retail again. The following earnings release excerpt provides some colour on e-commerce GAAP Revenue.\n\n GAAP revenue was US$922.3 million, up 250.4% year-on-year.\n\n\n GAAP revenue included US$715.9 million of GAAP marketplace revenue, up 285.0% year-on-year, and US$206.4 million of GAAP product revenue, up 167.1% year-on-year.\n\n\nSource:Q1 2021 Earnings Press Release\n\nComparing the above information to the GMV chart, we can infer thatSales have substantially outpaced GMV growth. This indicates a very deliberate move by the company to increase their take rates in dominant geographies.Take rates are a function of the GMV and represent the proportion of the total GMV that makes it to revenues. As the standard consumer internet company goes, you expand and acquire customers at all costs, then you increase prices and get profitable after capturing a market and habituating consumers to your platform. Overall, the actions have also decreased Adjusted EBITDA losses substantially and that allows Sea to play the balancing cash flow act on demand.\n\n Both in Southeast Asia and in Taiwan, Shopee ranked first in the Shopping category by average monthly active users and total time spent in-app on Android for the first quarter of 2021, according to App Annie.\n\n\n In Indonesia, where Shopee further accelerated its year-on-year growth in gross orders, it continued to rank first by average monthly active users and total time spent in app on Android in the Shopping category for the first quarter of 2021, according to App Annie.\n\n\nSource:Q1 2021 Earnings Press Release\n\nFrom a high-level view, Southeast Asia & Taiwan seem pretty much covered. However, within this region, Indonesia still presents the fiercest battleground for Shopee as it competes against the SoftBank-backed Tokopedia. The following charts show monthly website visits for both companies.\nSource:Southeast Asia Map of eCommerce, iPrice Group\nMonthly web visits from the iPrice Group show that Tokopedia saw more traffic (not necessarily sales) during the last quarter while it was behind during the last few. However, on mobile (App Store & Android), Shopee is the undisputed leader in the Shopping category. This is reassuring since mobile e-commerce has been outpacing total e-commerce as a category in almost every geography across every platform.\n\n\n\nIndonesia Mobile Rankings\nQ1 20\nQ2 20\nQ3 20\nQ4 20\nQ1 21\n\n\nShopee App Store\n1\n1\n1\n1\n1\n\n\nShopee PlayStore\n1\n1\n1\n1\n1\n\n\nTokopedia App Store\n2\n2\n2\n2\n2\n\n\nTokopedia PlayStore\n3\n3\n4\n4\n4\n\n\n\nSource: Southeast Asia Map of eCommerce, iPrice Group\nI would conclude that Tokopedia is a key competitor that needs to be watched closely and will prevent Shopee from exercising its take rates more liberally in the country. Furthermore, Indonesia represents the largest Southeast Asian market for e-commerce.Cross-pollination isn't just occurring across Sea's segments but also across Shopee's different e-commerce geographies.Profits from Shopee Thailand, for example, may be used to bring forth more competitive product pricing to Shopee Indonesia. Tokopedia is distinctly e-Commerce and limited to Indonesia, and likely doesn't have these internal cash generative advantages.\nLet's take a look at what's happening across the globe in Latin America. Shopee is growing like wildfire in Mexico and Brazil. The charts below represent recent data as of late May.\nSource: App Annie, Rankings by Country in the \"Shopping\" category\nBrazil and Mexico together make up for a population of ~330 million. The other e-commerce star in the category, MercadoLibre (MELI) ranks behind Shopee on Android for both Brazil and Mexico. The rankings depend on downloads instead of engagement, and MercadoLibre is often pegged to have a majority market share in Latin America as a whole (dominates Argentina). However, what the above alternative data above tell us is that Shopee has momentum in user share acquisition on an absolute basis. One can infer that more people are downloading Shopee in Mexico and Brazil as of late May compared to MercadoLibre at a faster rate. Higher downloads often translate to higher relatively higher market share gains.\nAdd all the Shopee geographies together and they represent a billion people and a combined GDP of $6.5T according to my calculations (Source for GDP:Worldometer). I reckon this is where to start when drawing up true long-term potential before narrowing down further.\nSeaMoney (Digital Financial Services)\n\nTotal Payment Volumes increased to $3.4B in Q1 21, from $1.0B during the same period last year\nQuarterly Paying Users increased to 26.1 million in Q1 21, from ~10 million during the same period last year\n\nSource:Q1 2021 Earnings Release\nSeaMoney is the umbrella under which Sea Group operates multiple Fintech Apps including Shopee Pay. Current products include payments and payment processing, but if one were to look beyond into other Fintech Apps in China or the West, digital financial services tend to coalesce into super apps. For many people living in Southeast Asia, it isn't even about disruption but rather their first introduction to financial services of any sort. Unfortunately, a glance at the Fintech environment would leave any public market investor a bit confused.\nSource:FintechNews.SG\n26.1 million quarterly paying users (QPUs), and not monthly-PUs or daily-PUs for that matter doesn't give us much granularity in data or how the segment is truly performing. $3.4B in Transaction Payment Volume is somewhat impressive, considering the last quarter saw about $12.6B in GMV on Shopee. Ultimately, the broader adoption of SeaMoney by both merchants and consumers beyond the Shopee platform is important to catalyze network large scale effects. The greater the versatility of SeaMoney across instances in real-life, the better the hold the division would have over consumers. Longer-term, offering just payments is not enough. Credit, Debit, Investing, and other financial services, all in one app have been shown to differentiate the winners from the losers in geographies like China, or in the United States with Cash App by Square (SQ).\nWhat can be said though, is that chances for continued growth, and winning market share are higher due to the group cross-pollination effects and network effects against Shopee customers. I would still see the segment through the eyes of an embedded option in the share price that would produce asymmetric reward if it does expand to more customers.\nThe Runway Ahead\nThe excerpts below were taken from a report published in late 2020 by Google, Temasek, and Bain & Company. The report highlights internet spending forecasts over six major markets in Southeast Asia: Singapore, Indonesia, Philippines, Thailand, Malaysia, and Vietnam.\n\nSource:e-Conomy SEA 2020; by Google, Temasek, and Bain & Company\nAs a whole, the internet economy in these countries is expected to compound at a CAGR (Compound Annual Growth Rate) of 24%, almost tripling from $105B in GMV in 2020 to $309B in 2025. This provides a sense of scale for the region and the internet opportunity that Sea currently operates in as a leader. Note that these numbers exclude Taiwan and Latin America.\nFor Digital Entertainment, Garena's Free Fire market appears to be a lot closer to saturation considering it is already one of the highest-grossing mobile games on the planet. Other Garena endeavours have a chance of success though I'd argue that \"Free Fire\"-like success is hard to come by especially in mobile gaming. Digital Financial Services is still early to call at least until it achieves broader mass adoption across the region. 26 million paying users is significant, though we'll have to give the business time until we can call it a meaningful sales contributor that in turn drives the stock price. As of now, it's a cash burn.\nThat leaves e-Commerce as the main sales driver for the company in the next 2-3 years. Here are some country-specific forecasts for e-Commerce by the same source.\nSource:e-Conomy SEA 2020, Local Highlights\nAs one would expect, Indonesia is the largest market. Vietnam is expected to compound at the fastest rate over the next few years. It's important to note that while the CAGRs are drawn in the 20-30% range, 2021 will see the highest rate while 2025 will see the lowest. 40%+ YoY SEA GMV growth for 2021 is quite likely in my opinion while 2025 could be closer to 15%.\nThe above chart uses GMV or Gross Merchandise Value. As discussed earlier, sales are a function of the take rate and the GMV. The take rate increases, the sales increase. Sea does this by dominating geographies and then deliberately increasing the take rate when network effects or the habituation of consumers on Shopee works at scale. Therefore, Sea's sales growth is set to outpace GMV expansion, especially when they widen their lead in a market. Given Latin America is also experiencing rapid Shopee adoption, it is reasonable to expect hyper-growth in the e-Commerce segment for years. The company expects 112% YoY growth for Shopee in FY2021 at the midpoint of their guidance (Source:Q4 20 Transcript).\nWeave the above pieces together, Sea has an immense growth runway. The e-Commerce opportunity indicates that the company can theoretically be in hyper-growth mode for another 2-3 years, well into 2023.\nWith an established competitive moat, if there's one company to bet on to capitalize and win on the $300B internet GMV opportunity for 2025 (not counting Latin America & Taiwan), Sea seems to be it. I expect the management will also come up with newer verticals that could expand their TAM further. Online in-app investing? travel? TV and movies? Streaming? With network effects this good, they have an unfair advantage. The management has already executed across multiple businesses and seems to deeply understand how the emerging market consumer thinks. They've also displayed evidence of tailoring apps, like Free Fire, to individual geography tastes to maximize execution. Let's look at the financials and valuation multiples to see how much of their future success is already factored in.\nGroup Financial Overview\nI previously mentioned the cash flow valley of death and how segments balance out to achieve cash flow generative growth. The company reports Adjusted EBITDA figures by segment that display similar trends. The \"adjustments\" are quite substantial compared to GAAP metrics, but they're a reasonable indicator after removing stock-based compensation, convertible interest payments, and non-core profitability generation. We're looking long-term here, so the game becomes comparing profitability to itself across time rather than other businesses. I'm more interested in trends and margin expansion rather than absolute values for now. The following chart shows how the breakdown balances out.\nSource: Author, Data from Company Filings\nThe trends were seen above follow the cash flow valley diagram. Digital Entertainment is funding Shopee and SeaMoney, and the net result (the bright pink line) is Group Adjusted EBITDA positive for the past four quarters. Going forward, I expect e-Commerce to pass its valley shortly as sales growth decelerates, and expect digital financial services to continue to burn cash at higher amounts sequentially. The group's total financial performance is encapsulated in the chart below:\nSource: Author, Data from Company Filings\nGross Profits have risen due to higher take rates in e-Commerce and improving incremental margins on Digital Entertainment. These margins would come under some pressure as Shopee will outpace Garena, and the lower-margin e-commerce will make a larger proportion of the gross profit mix. Adjusted EBITDA is under control, and while the company is unprofitable on a GAAP basis, I believe it is still fair given that the top-line is growing at triple-digit percentages. Total Revenue for Q4 has grown 12.6% QoQ and 146.7% YoY. On an LTM basis, Revenues have grown 113.7% YoY. With a long-runway ahead, and with the currently phenomenal product and sales execution, Sea Group is a financially healthy company.The profit tradeoff for growth is fair, even though it's a rarity given the sheer scale of the business.\nInvestors would take some relief in the fact that the company has amassed ~$5.8B in Cash & Equivalents on its balance sheet that would fund losses for some time. If need be, there is a profit switch in Shopee that the company can activate that will result in larger take rates to boost profitability. Sellers on the platform may have no choice in such a situation, considering the breadth, reach, and engagement on the Shopee platform and would go along with the asking price. There is a substantial moat here and the resulting pricing power can be exercised on demand to boost profitability. This isn't new information; Amazon's (AMZN) US e-commerce for example has made similar moves.\nValuation\nSource: Koyfin\nGroup Gross Profits are at the 30% range and Shopee specific metrics are expectedly lower. So a 23.7x LTM EV/S multiple is obviously huge. When contextualizing growth prospects and the excellent competitive positioning, the forward EV/S metrics are far more reasonable. According to the Koyfin database, the analyst consensus forward multiples are as follow:\n\nFY 2021 EV/S of 16.0x\nFY 2022 EV/S of 11.1x\nFY 2023 EV/S of 8.3x\n\nSource: Koyfin\nAnalysts have historically been on the side of conservatism for almost every high-growth tech company. Sea Group has almost always beaten its revenue figures though they usually fall slightly short on profitability. The 8.3x for 2023 means it's valued on Tencent-like multiples (adjusted for lower gross profits) but in three years. It is indeed a baby Tencent, and I would also argue that OTCPK:TCEHY itself is somewhat undervalued given the low sentiment surrounding regulations and foreign investments in Chinese tech. Are these multiples reasonable? And where is the upside? I believe SE's current price fair, but the upside will have to come from sustained revenue beats, continued product developments, and mass-scale user acquisition. Multiple compression may need to counter share price dilution, and then actually give us a reasonable rate of return. This is a situation where the following wisdom is applicable in my opinion:\n\n It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price-Warren Buffett\n\nIn my experience, when the quality of the company shines for a fair price, it's still worth an investment. Winners continue to win, and Sea Group is a rockstar business factoring in most qualitative aspects.Given the visionary management (Forrest Li & Co.) and what they've achieved so far, I'd put the odds in their favour.\nSpeaking of odds, there are potential catalysts that could pull the future towards us. One would hypothesise that Shopee winning in Indonesia on a more definitive basis would result in sales getting a boost from a strategic take-rate expansion. Across the planet, the Latin American story is looking impressive and shouldn't be underestimated given the size of Brazil and Mexico. That's an additional 50% e-Commerce TAM compared to Southeast Asia. SeaMoney still has a lot to prove but the network effects from Shopee should help sustain an onboarding of customers. The overall business has optionality. By that I mean, embedded options that could be triggered by a few developments and unlock share price appreciation. These are worth a premium.\nI'm currently long SE. I reckon there's still substantial outperformance potential over benchmarks though the easy alpha potential like we saw in 2020 is unlikely to present itself ever again. The bull thesis is too obvious now, everyone knows it, but it should still play out with alpha in my opinion. Every tech hedge fund in the world seems to be holding SE, and I agree with them. On the other hand, let's look at risks.\nRisks\n\nFree Fire Concentration:The mobile gaming industry is fast, dynamic, and always changing. The next great game is always around the corner and it's entirely possible that Free Fire's popularity fades and the accompanying cash generation dries up. I believe this risk has reduced over the last year, but it's still worth considering.\nCompetition:Tokopedia in Indonesia, MercadoLibre in Latin America, and other internet businesses like Grab & Gojek. There's plenty of competition at multiple fronts throughout the ecosystem.\nOverly aggressive expansion strategy:Sea Group's expansion into 7-8 countries and counting demonstrates a uniquely aggressive growth strategy. While their approach has worked out so far, it may work against them in the future. Knowing when to give up in a market that doesn't play out can stop unnecessary cash burn when the prize isn't significant enough.\nSystemic Risks:As a GAAP net loss business, Sea Group is subject to higher volatility, deep drawdowns, and sector/style selloffs. The sell-off in March is a recent example.\nMacro:Regulations and geopolitical factors in the emerging market geographies are typically more volatile than those in the US. A variety of macro risks and F/X risks are present at large.\n\nEnding Notes\nConcerns about overvaluation are perhaps warranted on a short-term outlook. In this situation, I do not have a strong near-term opinion but instead, harbour conviction in the company's long-term prospects. If one were to think in years rather than months, it is apparent to me that no competitor comes close to Sea Group in its chances for dominating e-commerce market share in most of its operating geographies. Indonesia is a key country to watch as Tokopedia is still putting up a fight. I'd put the odds on Sea since Tokopedia is a vanilla e-commerce player and doesn't have the scale and cross-pollination advantage unless they merge with another giant. Latin America is also looking like it will be a meaningful push to the top-line if not near term profitability. With excellent execution, Sea Group is leveraging its competitive positioning and is winning more often than not. The cross-pollination effect is a key advantage for internal cash generation and will help sustain the relentless growth as the business captures the massive opportunity that remains.\nI imagine many experienced investors that caught the Amazon (AMZN) train early would look back on their investment as a staple component of their portfolio over the years. In my opinion, Sea Group offers a similar proposition a bit earlier in its lifecycle. Currently trading at a market cap of $130B, Sea can theoretically double in a few years once again in my opinion. Tencent in a duopolistic landscape (withBABA) features a $748B market cap across a 1.3 billion Chinese population. SE can go a third of that in a few years with a monopolistic position in Southeast Asia, scaling to a 1 billion strong emerging market population. This isn't a pure alpha opportunity as multiples have substantially expanded, but I would ballpark the company to deliver a 20%+ compounded return for investors that continue to hold it for a few years.I'm long SE.\n*****\nThanks for reading! On a separate note, I'm excited to announce that I will be releasing a Marketplace subscription service soon called The Abstract Portfolio. High growth tech investing can involve a lot of fragmented information, sentiment, and noise. The Abstract Portfolio aims to bring focus and clarity by weaving together what matters and filtering out what doesn't. The service will feature a concentrated portfolio of cherry-picked stocks backed by rigorous fundamental research, assembled to deliver high absolute returns. Stay tuned!","news_type":1,"symbols_score_info":{"SE":0.9}},"isVote":1,"tweetType":1,"viewCount":642,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":18,"subscribersOnly":false,"subscribersOnlyAccessible":false,"xxTargetLangEnum":"ORIG"},"commentList":[],"isCommentEnd":true,"isTiger":false,"isWeiXinMini":false,"url":"/m/post/113526030"}