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2021-10-25
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Sea Limited: Spreading Its E-Commerce Tentacles<blockquote>Sea Limited：扩展电子商务触角</blockquote>
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{"i18n":{"language":"zh_CN"},"detailType":1,"isChannel":false,"data":{"magic":2,"id":858729823,"tweetId":"858729823","gmtCreate":1635124086998,"gmtModify":1635124087237,"author":{"id":3582010679449465,"idStr":"3582010679449465","authorId":3582010679449465,"authorIdStr":"3582010679449465","name":"ym80","avatar":"https://static.tigerbbs.com/f75a7eda8cb8b79563386243750d3227","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":11,"crmLevelSwitch":0,"individualDisplayBadges":[],"wearingBadges":[],"fanSize":11,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"title":"","extraTitle":"","html":"<html><head></head><body><p>👍🏼</p></body></html>","htmlText":"<html><head></head><body><p>👍🏼</p></body></html>","text":"👍🏼","highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":1,"repostSize":0,"favoriteSize":0,"link":"https://laohu8.com/post/858729823","repostId":1108996887,"repostType":4,"repost":{"id":"1108996887","kind":"news","pubTimestamp":1635123946,"share":"https://www.laohunote.com/m/news/1108996887?lang=zh_CN&edition=full","pubTime":"2021-10-25 09:05","market":"us","language":"en","title":"Sea Limited: Spreading Its E-Commerce Tentacles<blockquote>Sea Limited：扩展电子商务触角</blockquote>","url":"https://stock-news.laohu8.com/highlight/detail?id=1108996887","media":"Seeking Alpha","summary":"Summary\n\nSea Limited is the preeminent Internet company headquartered in Singapore. It has posted ga","content":"<p><b>Summary</b></p><p><blockquote><b>总结</b></blockquote></p><p> <ul> <li>Sea Limited is the preeminent Internet company headquartered in Singapore. It has posted gangbusters growth over the past couple of years.</li> <li>The company continues to sharpen its edge in mobile gaming. It has also penetrated more markets beyond Southeast Asia.</li> <li>We discuss whether Sea stock still presents a reasonable opportunity to add for investors now.</li> </ul> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/81d7d3e514cf6dfea7d8e68541eec1ca\" tg-width=\"1536\" tg-height=\"1025\" width=\"100%\" height=\"auto\"><span>franckreporter/E+ via Getty Images</span></p><p><blockquote><ul><li>Sea Limited是一家总部位于新加坡的卓越互联网公司。在过去的几年里，它实现了惊人的增长。</li><li>该公司继续提升其在移动游戏领域的优势。它还渗透到了东南亚以外的更多市场。</li><li>我们讨论 Sea stock 现在是否仍然为投资者提供合理的增持机会。</li></ul><p class=\"t-img-caption\"><span>franckreporter/E+ 来自盖蒂图片社</span></p></blockquote></p><p> <b>Investment Thesis</b></p><p><blockquote><b>投资论文</b></blockquote></p><p> Sea Limited (SE) is one of the highest conviction holdings in our growth portfolio. SE stock is one of those stocks that we have consistently added on significant dips previously. It has been a phenomenal outperformer for us over the last couple of years. We have never pared down our holdings and also added the stock at appropriate times.</p><p><blockquote>Sea Limited (SE) 是我们增长投资组合中最具信念的持股之一。SE 股票是我们之前在大幅下跌时持续增持的股票之一。在过去的几年里，它对我们来说表现出色。我们从未减持，也会在适当的时候增持股票。</blockquote></p><p> We have also covered the stock extensively. For investors who are new to Sea Limited, you can refer to our recent articles for a deeper dive:</p><p><blockquote>我们还广泛报道了该股票。对于刚接触 Sea Limited 的投资者，您可以参考我们最近的文章进行更深入的了解：</blockquote></p><p> <ul> <li>Is Sea Limited Stock A Good Buy For The Long-Term?</li> <li>MercadoLibre Vs. Sea Limited: Southeast Asia's Finest Takes On LatAm's E-Commerce Behemoth</li> <li>Sea Limited: Don't Underrate Garena's Tremendous Potential</li> </ul> Without a doubt, Sea Limited does not qualify as a stock for value investors. The stock is trading at a premium valuation. It still reports negative last-twelve-months (LTM) GAAP EBITDA margins despite its massive growth. Some investors can argue that much of its valuation is predicated on its ability to execute its revenue growth excellently.</p><p><blockquote><ul><li>从长远来看，Sea Limited 股票值得购买吗？</li><li>MercadoLibre 与 Sea Limited：东南亚最优秀的对抗拉丁美洲电子商务巨头</li><li>Sea Limited：不要低估 Garena 的巨大潜力</li></ul>毫无疑问，Sea Limited 不符合价值投资者的股票资格。该股的交易估值较高。尽管增长巨大，但过去 12 个月 (LTM) GAAP EBITDA 利润率仍然为负。一些投资者可能会认为，其估值很大程度上取决于其出色执行收入增长的能力。</blockquote></p><p> Recently, its e-commerce arm, Shopee, expanded further on its penetration into LatAm. We also discussed previously how Shopee's penetration into MercadoLibre's (MELI) home ground has been shaping up. We thought its recent $6.3B capital raise was to help drive its aggressive growth into LatAm mainly. However, the company has other ideas. Shopee recently announced its forays into several key e-commerce markets. These include India, France, Spain, and Poland. These have also been important markets for Amazon (AMZN) and Alibaba (BABA). But, Sea Limited is never afraid of competing against strong incumbents. It unseated Lazada (BABA) on its way to claiming the throne in Southeast Asia. It has also been driving hard against MELI in LatAm.</p><p><blockquote>最近，其电子商务部门Shopee进一步扩大了对拉丁美洲的渗透。我们之前还讨论过 Shopee 如何渗透到 MercadoLibre (MELI) 的主场。我们认为，其最近筹集的 6.3B 美元资金主要是为了帮助推动其在拉丁美洲的积极增长。不过，该公司还有其他想法。Shopee 最近宣布进军几个主要电子商务市场。这些国家包括印度、法国、西班牙和波兰。这些也是亚马逊（AMZN）和阿里巴巴-SW（BABA）的重要市场。但是，Sea Limited从不害怕与强大的现有企业竞争。它在夺取东南亚王位的道路上取代了Lazada（BABA）。它还在拉丁美洲大力反对梅利。</blockquote></p><p> We discuss whether SE stock is a buy as it spreads its dominance across the world.</p><p><blockquote>我们讨论 SE 股票在全球范围内扩大其主导地位时是否值得买入。</blockquote></p><p> <b>SE Stock YTD Performance</b></p><p><blockquote><b>SE 股票年初至今表现</b></blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/612df62f4da522d7951f2b26c3013573\" tg-width=\"640\" tg-height=\"331\" width=\"100%\" height=\"auto\"><span>SE stock YTD performance (as of 22 October 21).</span></p><p><blockquote><p class=\"t-img-caption\"><span>SE股票年初至今表现（截至21年10月22日）。</span></p></blockquote></p><p> SE stock has been on a phenomenal run in 2021 so far. It also suffered from the growth-to-value rotation earlier in the year. However, those dips proved to be transitory, as its upward momentum recovered swiftly. Ever since its last significant dip in May, the stock's momentum has been on a tear. The other minor dips have also proven to be opportunities for investors to add its stock. At the moment, its YTD return has reached 78.5%. It also easily outperformed its peers and the market. SE stock has proven to be an incredible winner against its more prominent peers.</p><p><blockquote>到目前为止，SE 股票在 2021 年表现惊人。今年早些时候，它还遭受了增长到价值的轮动。然而，这些下跌被证明是暂时的，因为其上涨势头迅速恢复。自 5 月份上次大幅下跌以来，该股的势头一直在飙升。其他小幅下跌也被证明是投资者增持股票的机会。目前，其年初至今回报率已达78.5%。它的表现也轻松优于同行和市场。事实证明，与更著名的同行相比，SE 股票是一个令人难以置信的赢家。</blockquote></p><p> <b>Taking Account of Shopee's Aggressive Expansion</b></p><p><blockquote><b>考虑到Shopee的积极扩张</b></blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/a0a42178971462228baa427dd13e8a50\" tg-width=\"640\" tg-height=\"395\" width=\"100%\" height=\"auto\"><span>Shopee quarterly GMV. Data source: Company filings</span></p><p><blockquote><p class=\"t-img-caption\"><span>Shopee季度GMV。数据来源：公司文件</span></p></blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/a17b899e6e0ed296f07a8cd67524d8f6\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\"><span>Shopee LTM GMV. Data source: Company filings</span></p><p><blockquote><p class=\"t-img-caption\"><span>虾皮LTM GMV。数据来源：公司文件</span></p></blockquote></p><p> Shopee has grown its gross merchandise value (GMV) very aggressively over the past year. At the end of 2020, it posted a GMV of $35.4B. By the end of H1'21, Shopee's LTM GMV reached $48.8B. Thus, its LTM GMV increased by an incredible 37.9% over 2 quarters. However, in our previous article (published on 13 August), we noted that Southeast Asia's top-6 countries' e-commerce GMV for 2020 was estimated at $62B. We also explained that even though the region is estimated to grow by a CAGR of 22.6% by 2025, its largest market, Indonesia, is estimated to experience slower growth. Indonesia's e-commerce market is estimated to grow by a CAGR of 19.1% through 2024.</p><p><blockquote>在过去的一年里，Shopee 的商品总价值 (GMV) 大幅增长。截至 2020 年底，其 GMV 为 $35.4B。到 H1'21 年底，Shopee 的 LTM GMV 达到 $48.8B。因此，其 LTM GMV 在两个季度内增长了令人难以置信的 37.9%。然而，在我们之前的文章（发表于8月13日）中，我们注意到东南亚前6个国家2020年的电子商务GMV估计为62B美元。我们还解释说，尽管该地区预计到2025年复合年增长率将达到22.6%，但其最大市场印度尼西亚的增长预计将放缓。预计到2024年，印度尼西亚的电子商务市场将以19.1%的复合年增长率增长。</blockquote></p><p> In contrast, LatAm is still expected to experience tremendous growth. Its e-commerce market is expected to grow by a CAGR of 28.1% through 2024, with Brazil and Mexico as the region's most important growth markets.</p><p><blockquote>相比之下，拉丁美洲仍有望经历巨大的增长。到2024年，其电子商务市场预计将以28.1%的复合年增长率增长，其中巴西和墨西哥是该地区最重要的增长市场。</blockquote></p><p></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/42242d1e289df1eada6b2e729dc143a7\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\"><span>MELI LTM GMV. Data source: Company filings</span></p><p><blockquote><p class=\"t-img-caption\"><span>LTM GMV 船。数据来源：公司文件</span></p></blockquote></p><p> MercadoLibre, Inc. has also been expanding rapidly. Its LTM GMV in H1'21 grew by 22% from the end of FY20. It seems to be slower than SE's gangbusters growth momentum. Notwithstanding, its quarterly YoY GMV growth in FQ2'21 reached 39.2%. Hence, MELI's incredible growth momentum doesn't seem to be slowing down. It demonstrates the massive growth opportunities in LatAm's e-commerce market.</p><p><blockquote>MercadoLibre, Inc. 也一直在快速扩张。其 2021 年上半年的 LTM GMV 较 2020 财年末增长了 22%。这似乎比SE的gangbusters增长势头要慢。尽管如此，其 2021 年第二季度 GMV 季度同比增长率达到 39.2%。因此，MELI令人难以置信的增长势头似乎并没有放缓。它展示了拉丁美洲电子商务市场的巨大增长机会。</blockquote></p><p> <b>Sea Limited Understands Its Markets Well Through Garena</b></p><p><blockquote><b>Sea Limited 通过 Garena 深入了解其市场</b></blockquote></p><p> Sea Limited understands LatAm very well through its Garena gaming segment. Its Free Fire (FF) mobile battle-royale game has benefited tremendously from the removal of Fortnite from both the App Store (AAPL) and Google Play (GOOGL) (GOOG). Fortnite has previously been a keen competitor against Garena. With its exclusion from Apple's and Google's apps ecosystem for at least the next five years all but confirmed, Free Fire dominance is here to stay. Investors who don't understand gaming development well often consider FF's success as also its biggest challenge. It thinks FF will be replaced easily by other gaming genres or other games. But, the truth is top-performing games are tough to displace. They become even more entrenched as their users base increase. The barriers to entry to oust the top games are highly challenging. Beyond just the users base, top-quality games development also requires a long lead time.</p><p><blockquote>Sea Limited 通过其 Garena 游戏部门非常了解 LatAm。其 Free Fire (FF) 移动大逃杀游戏从 App Store (AAPL) 和 Google Play (GOOGL) (GOOG) 下架中受益匪浅。堡垒之夜此前一直是Garena的激烈竞争对手。随着它至少在未来五年内被排除在苹果和谷歌的应用生态系统之外，几乎已经确定，Free Fire的主导地位将继续存在。不太了解游戏开发的投资者往往认为FF的成功也是其最大的挑战。它认为FF将很容易被其他游戏类型或其他游戏所取代。但是，事实是表现最好的游戏很难被取代。随着用户群的增加，他们变得更加根深蒂固。驱逐顶级游戏的进入壁垒极具挑战性。除了用户群，高质量的游戏开发也需要很长的准备时间。</blockquote></p><p> Sea Limited has often reminded investors that they think FF is still very early in its life cycle. Worldwide gaming leader Tencent (OTCPK:TCEHY) also emphasized the challenge in developing \"original IPs.\" Tencent emphasized:</p><p><blockquote>Sea Limited经常提醒投资者，他们认为FF仍处于生命周期的早期阶段。全球游戏领导者腾讯控股 (OTCPK:TCEHY) 也强调了开发“原创 IP”的挑战。腾讯控股强调：</blockquote></p><p> Just one point to add, right. On the gaming side, I think you emphasized [the] point [of] new creation of IPs and true, <i>is many years before you can see final product.</i>I think if you look at our recent pipeline of games, which we have announced of more than 40 of them, I think it's a combination, right? <i>Some are original IPs, which would take a very long time to develop.</i>(from Tencent FQ1'21 earnings call) <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/f35c785ce1b4e95696380aa9383423a4\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\"><span>Mobile games with the highest IAP from January to September 2021. Data source: AppMagic</span></p><p><blockquote>只想补充一点，对吧。在游戏方面，我认为您强调了知识产权的新创造，<i>要过很多年才能看到最终产品。</i>我认为如果你看看我们最近的游戏管道，我们已经宣布了40多款，我认为这是一个组合，对吗？<i>有些是原创IP，需要很长时间来开发。</i>（摘自腾讯控股 2021 年第一季度收益看涨期权）<p class=\"t-img-caption\"><span>2021年1月至9月IAP最高的手机游戏。数据来源：AppMagic</span></p></blockquote></p><p> FF came in 8th in the ranking of mobile games with the highest in-app purchases (IAP) from January to September 2021. However, it's essential to consider that mobile games also have advertising revenue not covered in the IAP ranking.</p><p><blockquote>2021年1月至9月，FF在应用内购买（IAP）最高的手机游戏排名中位列第八。然而，有必要考虑到移动游戏也有IAP排名中没有涵盖的广告收入。</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/db273f87ece18ef3e95fd10a49e60e59\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\"><span>Garena quarterly revenue. Data source: Company filings</span></p><p><blockquote><p class=\"t-img-caption\"><span>Garena 季度收入。数据来源：公司文件</span></p></blockquote></p><p> Garena's revenue surpassed $1.8B in H1'21. Therefore, investors can quickly glean the immense monetization capability of Sea Limited's gaming segment. Notably, Free Fire is very strong in Google Play.</p><p><blockquote>2021 年上半年，Garena 的收入超过 18 亿美元。因此，投资者可以快速收集Sea Limited博彩部门的巨大货币化能力。值得注意的是，Free Fire在Google Play中非常强大。</blockquote></p><p> Based on statistics from Sensor Tower, FF ranked #3 in worldwide downloads in Q3'21. However, the large majority of it stemmed from Android users. The top three markets by downloads in Google Play have consistently been India, Brazil, and Indonesia. Therefore, investors can easily understand why Shopee is targeting LatAm so aggressively. Garena acts not just as a cash flow machine to sustain Shopee's aggressive expansion but also as a flywheel to extend its leadership. Sea Limited has astutely used Garena's leadership's growing influence and financial prowess to expand its ecosystem and sharpen its edge.</p><p><blockquote>根据Sensor Tower的统计数据，FF在2021年第三季度的全球下载量中排名第三。然而，其中绝大多数来自Android用户。Google Play下载量排名前三的市场一直是印度、巴西和印度尼西亚。因此，投资者很容易理解为什么Shopee如此积极地瞄准拉丁美洲。Garena不仅是维持Shopee积极扩张的现金流机器，也是扩大其领导地位的飞轮。Sea Limited 巧妙地利用 Garena 领导层日益增长的影响力和财务实力来扩大其生态系统并提高其优势。</blockquote></p><p> Sensor Tower also highlighted that FF was the highest-grossing shooter game in Q3'21 worldwide. It easily outperformed Call of Duty: Mobile (ATVI) and Tencent's PUBG Mobile.</p><p><blockquote>Sensor Tower还强调，FF是Q3’21全球票房最高的射击游戏。它轻松击败了《看涨期权：使命召唤：移动》（ATVI）和腾讯的《绝地求生》（PUBG Mobile）。</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/b839c373c6a45c5688b429a8ce803760\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\"><span>Garena Average revenue per active user. Data source: Company filings</span></p><p><blockquote><p class=\"t-img-caption\"><span>Garena 每个活跃用户的平均收入。数据来源：公司文件</span></p></blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/65e29f1027db894305ea59c0c24ad996\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\"><span>Garena average revenue per paying user. Data source: Company filings</span></p><p><blockquote><p class=\"t-img-caption\"><span>Garena每个付费用户的平均收入。数据来源：公司文件</span></p></blockquote></p><p></p><p> We think investors who are bearish on Garena's prospects don't understand its monetization capabilities and opportunities well. As Garena exceeded $1B in its quarterly revenue, it has also improved its average revenue per user (both paying and active) remarkably. Thus, we can observe a consistent trend of enhanced monetization. Notably, the opportunities to monetize users who are not paying are tremendous. On a per active user basis, its average revenue was just $1.41 in FQ2'21. However, the figure jumped to $11.11 on a per-paying user basis. Therefore, there are massive growth opportunities just by converting users into paying users.</p><p><blockquote>我们认为看跌 Garena 前景的投资者并没有很好地了解其货币化能力和机会。随着 Garena 的季度收入超过 10 亿美元，它的每用户平均收入（包括付费用户和活跃用户）也显着提高。因此，我们可以观察到货币化增强的持续趋势。值得注意的是，将不付费用户货币化的机会是巨大的。按每个活跃用户计算，其在 2021 年第二季度的平均收入仅为 1.41 美元。然而，按付费用户计算，这一数字跃升至11.11美元。因此，仅仅通过将用户转化为付费用户，就有巨大的增长机会。</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/0a6778158bd4b839472d4755318891fb\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\"><span>Garena paying users ratio. Data source: Company filings</span></p><p><blockquote><p class=\"t-img-caption\"><span>Garena付费用户比例。数据来源：公司文件</span></p></blockquote></p><p> That's precisely what Garena has been doing. The company has been consistently converting its non-paying users into paying ones. As a result, its paying users' ratio reached 12.7% at the latest FQ. We think the best is yet to come for Sea Limited's massive cash cow. There are still plenty of opportunities for Garena to milk its ever-popular FF game.</p><p><blockquote>这正是 Garena 一直在做的事情。该公司一直在将非付费用户转化为付费用户。因此，其付费用户比例在最新财年达到12.7%。我们认为 Sea Limited 的巨额摇钱树最好的还在后头。Garena 仍然有很多机会来榨取其广受欢迎的 FF 游戏。</blockquote></p><p> <b>So, is Sea Stock a Buy Now?</b></p><p><blockquote><b>那么，Sea 股票现在值得买入吗？</b></blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/146f95a386f24736b4f64df978686494\" tg-width=\"640\" tg-height=\"384\" width=\"100%\" height=\"auto\"><span>Sea stock EV/NTM Rev valuation trend.</span></p><p><blockquote><p class=\"t-img-caption\"><span>Sea 股票 EV/NTM Rev 估值趋势。</span></p></blockquote></p><p> Sea Stock is currently trading at an EV/NTM Rev of 16.2x. Compared to its 1Y mean of 15.9x, Sea stock may seem to be fairly valued now. Our members in the service have also added Sea stock at the recent September/October retracement. We saw the opportunity to add SE stock at a reasonable margin of safety. Therefore, our members already have a decent buffer from its current price as of now. If readers choose to add SE stock now, you should understand that you are adding it at fair value. Therefore, you might not have the margin of safety that we often espouse for high-growth stocks.</p><p><blockquote>Sea 股票目前的 EV/NTM 转速为 16.2 倍。与 15.9 倍的 1 年平均水平相比，Sea 股票现在的估值似乎相当合理。我们的服务成员还在最近的 9 月/10 月回撤中增加了 Sea 股票。我们看到了以合理的安全边际增加 SE 股票的机会。因此，到目前为止，我们的会员已经从目前的价格中获得了可观的缓冲。如果读者现在选择添加SE股票，您应该明白您是以公允价值添加的。因此，您可能没有我们通常支持的高增长股票的安全边际。</blockquote></p><p> Nevertheless, we are still optimistic about SE's long-term growth potential and<i>will rate the stock at Buy</i>.</p><p><blockquote>尽管如此，我们仍然看好SE的长期增长潜力和<i>将该股评级为买入</i>.</blockquote></p><p></p>","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>Sea Limited: Spreading Its E-Commerce Tentacles<blockquote>Sea Limited：扩展电子商务触角</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\">\nSea Limited: Spreading Its E-Commerce Tentacles<blockquote>Sea Limited：扩展电子商务触角</blockquote>\n</h2>\n<h4 class=\"meta\">\n<p class=\"head\">\n<strong class=\"h-name small\">Seeking Alpha</strong><span class=\"h-time small\">2021-10-25 09:05</span>\n</p>\n</h4>\n</header>\n<article>\n<p><b>Summary</b></p><p><blockquote><b>总结</b></blockquote></p><p> <ul> <li>Sea Limited is the preeminent Internet company headquartered in Singapore. It has posted gangbusters growth over the past couple of years.</li> <li>The company continues to sharpen its edge in mobile gaming. It has also penetrated more markets beyond Southeast Asia.</li> <li>We discuss whether Sea stock still presents a reasonable opportunity to add for investors now.</li> </ul> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/81d7d3e514cf6dfea7d8e68541eec1ca\" tg-width=\"1536\" tg-height=\"1025\" width=\"100%\" height=\"auto\"><span>franckreporter/E+ via Getty Images</span></p><p><blockquote><ul><li>Sea Limited是一家总部位于新加坡的卓越互联网公司。在过去的几年里，它实现了惊人的增长。</li><li>该公司继续提升其在移动游戏领域的优势。它还渗透到了东南亚以外的更多市场。</li><li>我们讨论 Sea stock 现在是否仍然为投资者提供合理的增持机会。</li></ul><p class=\"t-img-caption\"><span>franckreporter/E+ 来自盖蒂图片社</span></p></blockquote></p><p> <b>Investment Thesis</b></p><p><blockquote><b>投资论文</b></blockquote></p><p> Sea Limited (SE) is one of the highest conviction holdings in our growth portfolio. SE stock is one of those stocks that we have consistently added on significant dips previously. It has been a phenomenal outperformer for us over the last couple of years. We have never pared down our holdings and also added the stock at appropriate times.</p><p><blockquote>Sea Limited (SE) 是我们增长投资组合中最具信念的持股之一。SE 股票是我们之前在大幅下跌时持续增持的股票之一。在过去的几年里，它对我们来说表现出色。我们从未减持，也会在适当的时候增持股票。</blockquote></p><p> We have also covered the stock extensively. For investors who are new to Sea Limited, you can refer to our recent articles for a deeper dive:</p><p><blockquote>我们还广泛报道了该股票。对于刚接触 Sea Limited 的投资者，您可以参考我们最近的文章进行更深入的了解：</blockquote></p><p> <ul> <li>Is Sea Limited Stock A Good Buy For The Long-Term?</li> <li>MercadoLibre Vs. Sea Limited: Southeast Asia's Finest Takes On LatAm's E-Commerce Behemoth</li> <li>Sea Limited: Don't Underrate Garena's Tremendous Potential</li> </ul> Without a doubt, Sea Limited does not qualify as a stock for value investors. The stock is trading at a premium valuation. It still reports negative last-twelve-months (LTM) GAAP EBITDA margins despite its massive growth. Some investors can argue that much of its valuation is predicated on its ability to execute its revenue growth excellently.</p><p><blockquote><ul><li>从长远来看，Sea Limited 股票值得购买吗？</li><li>MercadoLibre 与 Sea Limited：东南亚最优秀的对抗拉丁美洲电子商务巨头</li><li>Sea Limited：不要低估 Garena 的巨大潜力</li></ul>毫无疑问，Sea Limited 不符合价值投资者的股票资格。该股的交易估值较高。尽管增长巨大，但过去 12 个月 (LTM) GAAP EBITDA 利润率仍然为负。一些投资者可能会认为，其估值很大程度上取决于其出色执行收入增长的能力。</blockquote></p><p> Recently, its e-commerce arm, Shopee, expanded further on its penetration into LatAm. We also discussed previously how Shopee's penetration into MercadoLibre's (MELI) home ground has been shaping up. We thought its recent $6.3B capital raise was to help drive its aggressive growth into LatAm mainly. However, the company has other ideas. Shopee recently announced its forays into several key e-commerce markets. These include India, France, Spain, and Poland. These have also been important markets for Amazon (AMZN) and Alibaba (BABA). But, Sea Limited is never afraid of competing against strong incumbents. It unseated Lazada (BABA) on its way to claiming the throne in Southeast Asia. It has also been driving hard against MELI in LatAm.</p><p><blockquote>最近，其电子商务部门Shopee进一步扩大了对拉丁美洲的渗透。我们之前还讨论过 Shopee 如何渗透到 MercadoLibre (MELI) 的主场。我们认为，其最近筹集的 6.3B 美元资金主要是为了帮助推动其在拉丁美洲的积极增长。不过，该公司还有其他想法。Shopee 最近宣布进军几个主要电子商务市场。这些国家包括印度、法国、西班牙和波兰。这些也是亚马逊（AMZN）和阿里巴巴-SW（BABA）的重要市场。但是，Sea Limited从不害怕与强大的现有企业竞争。它在夺取东南亚王位的道路上取代了Lazada（BABA）。它还在拉丁美洲大力反对梅利。</blockquote></p><p> We discuss whether SE stock is a buy as it spreads its dominance across the world.</p><p><blockquote>我们讨论 SE 股票在全球范围内扩大其主导地位时是否值得买入。</blockquote></p><p> <b>SE Stock YTD Performance</b></p><p><blockquote><b>SE 股票年初至今表现</b></blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/612df62f4da522d7951f2b26c3013573\" tg-width=\"640\" tg-height=\"331\" width=\"100%\" height=\"auto\"><span>SE stock YTD performance (as of 22 October 21).</span></p><p><blockquote><p class=\"t-img-caption\"><span>SE股票年初至今表现（截至21年10月22日）。</span></p></blockquote></p><p> SE stock has been on a phenomenal run in 2021 so far. It also suffered from the growth-to-value rotation earlier in the year. However, those dips proved to be transitory, as its upward momentum recovered swiftly. Ever since its last significant dip in May, the stock's momentum has been on a tear. The other minor dips have also proven to be opportunities for investors to add its stock. At the moment, its YTD return has reached 78.5%. It also easily outperformed its peers and the market. SE stock has proven to be an incredible winner against its more prominent peers.</p><p><blockquote>到目前为止，SE 股票在 2021 年表现惊人。今年早些时候，它还遭受了增长到价值的轮动。然而，这些下跌被证明是暂时的，因为其上涨势头迅速恢复。自 5 月份上次大幅下跌以来，该股的势头一直在飙升。其他小幅下跌也被证明是投资者增持股票的机会。目前，其年初至今回报率已达78.5%。它的表现也轻松优于同行和市场。事实证明，与更著名的同行相比，SE 股票是一个令人难以置信的赢家。</blockquote></p><p> <b>Taking Account of Shopee's Aggressive Expansion</b></p><p><blockquote><b>考虑到Shopee的积极扩张</b></blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/a0a42178971462228baa427dd13e8a50\" tg-width=\"640\" tg-height=\"395\" width=\"100%\" height=\"auto\"><span>Shopee quarterly GMV. Data source: Company filings</span></p><p><blockquote><p class=\"t-img-caption\"><span>Shopee季度GMV。数据来源：公司文件</span></p></blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/a17b899e6e0ed296f07a8cd67524d8f6\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\"><span>Shopee LTM GMV. Data source: Company filings</span></p><p><blockquote><p class=\"t-img-caption\"><span>虾皮LTM GMV。数据来源：公司文件</span></p></blockquote></p><p> Shopee has grown its gross merchandise value (GMV) very aggressively over the past year. At the end of 2020, it posted a GMV of $35.4B. By the end of H1'21, Shopee's LTM GMV reached $48.8B. Thus, its LTM GMV increased by an incredible 37.9% over 2 quarters. However, in our previous article (published on 13 August), we noted that Southeast Asia's top-6 countries' e-commerce GMV for 2020 was estimated at $62B. We also explained that even though the region is estimated to grow by a CAGR of 22.6% by 2025, its largest market, Indonesia, is estimated to experience slower growth. Indonesia's e-commerce market is estimated to grow by a CAGR of 19.1% through 2024.</p><p><blockquote>在过去的一年里，Shopee 的商品总价值 (GMV) 大幅增长。截至 2020 年底，其 GMV 为 $35.4B。到 H1'21 年底，Shopee 的 LTM GMV 达到 $48.8B。因此，其 LTM GMV 在两个季度内增长了令人难以置信的 37.9%。然而，在我们之前的文章（发表于8月13日）中，我们注意到东南亚前6个国家2020年的电子商务GMV估计为62B美元。我们还解释说，尽管该地区预计到2025年复合年增长率将达到22.6%，但其最大市场印度尼西亚的增长预计将放缓。预计到2024年，印度尼西亚的电子商务市场将以19.1%的复合年增长率增长。</blockquote></p><p> In contrast, LatAm is still expected to experience tremendous growth. Its e-commerce market is expected to grow by a CAGR of 28.1% through 2024, with Brazil and Mexico as the region's most important growth markets.</p><p><blockquote>相比之下，拉丁美洲仍有望经历巨大的增长。到2024年，其电子商务市场预计将以28.1%的复合年增长率增长，其中巴西和墨西哥是该地区最重要的增长市场。</blockquote></p><p></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/42242d1e289df1eada6b2e729dc143a7\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\"><span>MELI LTM GMV. Data source: Company filings</span></p><p><blockquote><p class=\"t-img-caption\"><span>LTM GMV 船。数据来源：公司文件</span></p></blockquote></p><p> MercadoLibre, Inc. has also been expanding rapidly. Its LTM GMV in H1'21 grew by 22% from the end of FY20. It seems to be slower than SE's gangbusters growth momentum. Notwithstanding, its quarterly YoY GMV growth in FQ2'21 reached 39.2%. Hence, MELI's incredible growth momentum doesn't seem to be slowing down. It demonstrates the massive growth opportunities in LatAm's e-commerce market.</p><p><blockquote>MercadoLibre, Inc. 也一直在快速扩张。其 2021 年上半年的 LTM GMV 较 2020 财年末增长了 22%。这似乎比SE的gangbusters增长势头要慢。尽管如此，其 2021 年第二季度 GMV 季度同比增长率达到 39.2%。因此，MELI令人难以置信的增长势头似乎并没有放缓。它展示了拉丁美洲电子商务市场的巨大增长机会。</blockquote></p><p> <b>Sea Limited Understands Its Markets Well Through Garena</b></p><p><blockquote><b>Sea Limited 通过 Garena 深入了解其市场</b></blockquote></p><p> Sea Limited understands LatAm very well through its Garena gaming segment. Its Free Fire (FF) mobile battle-royale game has benefited tremendously from the removal of Fortnite from both the App Store (AAPL) and Google Play (GOOGL) (GOOG). Fortnite has previously been a keen competitor against Garena. With its exclusion from Apple's and Google's apps ecosystem for at least the next five years all but confirmed, Free Fire dominance is here to stay. Investors who don't understand gaming development well often consider FF's success as also its biggest challenge. It thinks FF will be replaced easily by other gaming genres or other games. But, the truth is top-performing games are tough to displace. They become even more entrenched as their users base increase. The barriers to entry to oust the top games are highly challenging. Beyond just the users base, top-quality games development also requires a long lead time.</p><p><blockquote>Sea Limited 通过其 Garena 游戏部门非常了解 LatAm。其 Free Fire (FF) 移动大逃杀游戏从 App Store (AAPL) 和 Google Play (GOOGL) (GOOG) 下架中受益匪浅。堡垒之夜此前一直是Garena的激烈竞争对手。随着它至少在未来五年内被排除在苹果和谷歌的应用生态系统之外，几乎已经确定，Free Fire的主导地位将继续存在。不太了解游戏开发的投资者往往认为FF的成功也是其最大的挑战。它认为FF将很容易被其他游戏类型或其他游戏所取代。但是，事实是表现最好的游戏很难被取代。随着用户群的增加，他们变得更加根深蒂固。驱逐顶级游戏的进入壁垒极具挑战性。除了用户群，高质量的游戏开发也需要很长的准备时间。</blockquote></p><p> Sea Limited has often reminded investors that they think FF is still very early in its life cycle. Worldwide gaming leader Tencent (OTCPK:TCEHY) also emphasized the challenge in developing \"original IPs.\" Tencent emphasized:</p><p><blockquote>Sea Limited经常提醒投资者，他们认为FF仍处于生命周期的早期阶段。全球游戏领导者腾讯控股 (OTCPK:TCEHY) 也强调了开发“原创 IP”的挑战。腾讯控股强调：</blockquote></p><p> Just one point to add, right. On the gaming side, I think you emphasized [the] point [of] new creation of IPs and true, <i>is many years before you can see final product.</i>I think if you look at our recent pipeline of games, which we have announced of more than 40 of them, I think it's a combination, right? <i>Some are original IPs, which would take a very long time to develop.</i>(from Tencent FQ1'21 earnings call) <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/f35c785ce1b4e95696380aa9383423a4\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\"><span>Mobile games with the highest IAP from January to September 2021. Data source: AppMagic</span></p><p><blockquote>只想补充一点，对吧。在游戏方面，我认为您强调了知识产权的新创造，<i>要过很多年才能看到最终产品。</i>我认为如果你看看我们最近的游戏管道，我们已经宣布了40多款，我认为这是一个组合，对吗？<i>有些是原创IP，需要很长时间来开发。</i>（摘自腾讯控股 2021 年第一季度收益看涨期权）<p class=\"t-img-caption\"><span>2021年1月至9月IAP最高的手机游戏。数据来源：AppMagic</span></p></blockquote></p><p> FF came in 8th in the ranking of mobile games with the highest in-app purchases (IAP) from January to September 2021. However, it's essential to consider that mobile games also have advertising revenue not covered in the IAP ranking.</p><p><blockquote>2021年1月至9月，FF在应用内购买（IAP）最高的手机游戏排名中位列第八。然而，有必要考虑到移动游戏也有IAP排名中没有涵盖的广告收入。</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/db273f87ece18ef3e95fd10a49e60e59\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\"><span>Garena quarterly revenue. Data source: Company filings</span></p><p><blockquote><p class=\"t-img-caption\"><span>Garena 季度收入。数据来源：公司文件</span></p></blockquote></p><p> Garena's revenue surpassed $1.8B in H1'21. Therefore, investors can quickly glean the immense monetization capability of Sea Limited's gaming segment. Notably, Free Fire is very strong in Google Play.</p><p><blockquote>2021 年上半年，Garena 的收入超过 18 亿美元。因此，投资者可以快速收集Sea Limited博彩部门的巨大货币化能力。值得注意的是，Free Fire在Google Play中非常强大。</blockquote></p><p> Based on statistics from Sensor Tower, FF ranked #3 in worldwide downloads in Q3'21. However, the large majority of it stemmed from Android users. The top three markets by downloads in Google Play have consistently been India, Brazil, and Indonesia. Therefore, investors can easily understand why Shopee is targeting LatAm so aggressively. Garena acts not just as a cash flow machine to sustain Shopee's aggressive expansion but also as a flywheel to extend its leadership. Sea Limited has astutely used Garena's leadership's growing influence and financial prowess to expand its ecosystem and sharpen its edge.</p><p><blockquote>根据Sensor Tower的统计数据，FF在2021年第三季度的全球下载量中排名第三。然而，其中绝大多数来自Android用户。Google Play下载量排名前三的市场一直是印度、巴西和印度尼西亚。因此，投资者很容易理解为什么Shopee如此积极地瞄准拉丁美洲。Garena不仅是维持Shopee积极扩张的现金流机器，也是扩大其领导地位的飞轮。Sea Limited 巧妙地利用 Garena 领导层日益增长的影响力和财务实力来扩大其生态系统并提高其优势。</blockquote></p><p> Sensor Tower also highlighted that FF was the highest-grossing shooter game in Q3'21 worldwide. It easily outperformed Call of Duty: Mobile (ATVI) and Tencent's PUBG Mobile.</p><p><blockquote>Sensor Tower还强调，FF是Q3’21全球票房最高的射击游戏。它轻松击败了《看涨期权：使命召唤：移动》（ATVI）和腾讯的《绝地求生》（PUBG Mobile）。</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/b839c373c6a45c5688b429a8ce803760\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\"><span>Garena Average revenue per active user. Data source: Company filings</span></p><p><blockquote><p class=\"t-img-caption\"><span>Garena 每个活跃用户的平均收入。数据来源：公司文件</span></p></blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/65e29f1027db894305ea59c0c24ad996\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\"><span>Garena average revenue per paying user. Data source: Company filings</span></p><p><blockquote><p class=\"t-img-caption\"><span>Garena每个付费用户的平均收入。数据来源：公司文件</span></p></blockquote></p><p></p><p> We think investors who are bearish on Garena's prospects don't understand its monetization capabilities and opportunities well. As Garena exceeded $1B in its quarterly revenue, it has also improved its average revenue per user (both paying and active) remarkably. Thus, we can observe a consistent trend of enhanced monetization. Notably, the opportunities to monetize users who are not paying are tremendous. On a per active user basis, its average revenue was just $1.41 in FQ2'21. However, the figure jumped to $11.11 on a per-paying user basis. Therefore, there are massive growth opportunities just by converting users into paying users.</p><p><blockquote>我们认为看跌 Garena 前景的投资者并没有很好地了解其货币化能力和机会。随着 Garena 的季度收入超过 10 亿美元，它的每用户平均收入（包括付费用户和活跃用户）也显着提高。因此，我们可以观察到货币化增强的持续趋势。值得注意的是，将不付费用户货币化的机会是巨大的。按每个活跃用户计算，其在 2021 年第二季度的平均收入仅为 1.41 美元。然而，按付费用户计算，这一数字跃升至11.11美元。因此，仅仅通过将用户转化为付费用户，就有巨大的增长机会。</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/0a6778158bd4b839472d4755318891fb\" tg-width=\"640\" tg-height=\"396\" width=\"100%\" height=\"auto\"><span>Garena paying users ratio. Data source: Company filings</span></p><p><blockquote><p class=\"t-img-caption\"><span>Garena付费用户比例。数据来源：公司文件</span></p></blockquote></p><p> That's precisely what Garena has been doing. The company has been consistently converting its non-paying users into paying ones. As a result, its paying users' ratio reached 12.7% at the latest FQ. We think the best is yet to come for Sea Limited's massive cash cow. There are still plenty of opportunities for Garena to milk its ever-popular FF game.</p><p><blockquote>这正是 Garena 一直在做的事情。该公司一直在将非付费用户转化为付费用户。因此，其付费用户比例在最新财年达到12.7%。我们认为 Sea Limited 的巨额摇钱树最好的还在后头。Garena 仍然有很多机会来榨取其广受欢迎的 FF 游戏。</blockquote></p><p> <b>So, is Sea Stock a Buy Now?</b></p><p><blockquote><b>那么，Sea 股票现在值得买入吗？</b></blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/146f95a386f24736b4f64df978686494\" tg-width=\"640\" tg-height=\"384\" width=\"100%\" height=\"auto\"><span>Sea stock EV/NTM Rev valuation trend.</span></p><p><blockquote><p class=\"t-img-caption\"><span>Sea 股票 EV/NTM Rev 估值趋势。</span></p></blockquote></p><p> Sea Stock is currently trading at an EV/NTM Rev of 16.2x. Compared to its 1Y mean of 15.9x, Sea stock may seem to be fairly valued now. Our members in the service have also added Sea stock at the recent September/October retracement. We saw the opportunity to add SE stock at a reasonable margin of safety. Therefore, our members already have a decent buffer from its current price as of now. If readers choose to add SE stock now, you should understand that you are adding it at fair value. Therefore, you might not have the margin of safety that we often espouse for high-growth stocks.</p><p><blockquote>Sea 股票目前的 EV/NTM 转速为 16.2 倍。与 15.9 倍的 1 年平均水平相比，Sea 股票现在的估值似乎相当合理。我们的服务成员还在最近的 9 月/10 月回撤中增加了 Sea 股票。我们看到了以合理的安全边际增加 SE 股票的机会。因此，到目前为止，我们的会员已经从目前的价格中获得了可观的缓冲。如果读者现在选择添加SE股票，您应该明白您是以公允价值添加的。因此，您可能没有我们通常支持的高增长股票的安全边际。</blockquote></p><p> Nevertheless, we are still optimistic about SE's long-term growth potential and<i>will rate the stock at Buy</i>.</p><p><blockquote>尽管如此，我们仍然看好SE的长期增长潜力和<i>将该股评级为买入</i>.</blockquote></p><p></p>\n<div class=\"bt-text\">\n\n\n<p> 来源：<a href=\"https://seekingalpha.com/article/4461692-sea-limited-spreading-its-e-commerce-tentacles-is-sea-stock-a-buy\">Seeking Alpha</a></p>\n<p>为提升您的阅读体验，我们对本页面进行了排版优化</p>\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/4461692-sea-limited-spreading-its-e-commerce-tentacles-is-sea-stock-a-buy","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1108996887","content_text":"Summary\n\nSea Limited is the preeminent Internet company headquartered in Singapore. It has posted gangbusters growth over the past couple of years.\nThe company continues to sharpen its edge in mobile gaming. It has also penetrated more markets beyond Southeast Asia.\nWe discuss whether Sea stock still presents a reasonable opportunity to add for investors now.\n\nfranckreporter/E+ via Getty Images\nInvestment Thesis\nSea Limited (SE) is one of the highest conviction holdings in our growth portfolio. SE stock is one of those stocks that we have consistently added on significant dips previously. It has been a phenomenal outperformer for us over the last couple of years. We have never pared down our holdings and also added the stock at appropriate times.\nWe have also covered the stock extensively. For investors who are new to Sea Limited, you can refer to our recent articles for a deeper dive:\n\nIs Sea Limited Stock A Good Buy For The Long-Term?\nMercadoLibre Vs. Sea Limited: Southeast Asia's Finest Takes On LatAm's E-Commerce Behemoth\nSea Limited: Don't Underrate Garena's Tremendous Potential\n\nWithout a doubt, Sea Limited does not qualify as a stock for value investors. The stock is trading at a premium valuation. It still reports negative last-twelve-months (LTM) GAAP EBITDA margins despite its massive growth. Some investors can argue that much of its valuation is predicated on its ability to execute its revenue growth excellently.\nRecently, its e-commerce arm, Shopee, expanded further on its penetration into LatAm. We also discussed previously how Shopee's penetration into MercadoLibre's (MELI) home ground has been shaping up. We thought its recent $6.3B capital raise was to help drive its aggressive growth into LatAm mainly. However, the company has other ideas. Shopee recently announced its forays into several key e-commerce markets. These include India, France, Spain, and Poland. These have also been important markets for Amazon (AMZN) and Alibaba (BABA). But, Sea Limited is never afraid of competing against strong incumbents. It unseated Lazada (BABA) on its way to claiming the throne in Southeast Asia. It has also been driving hard against MELI in LatAm.\nWe discuss whether SE stock is a buy as it spreads its dominance across the world.\nSE Stock YTD Performance\nSE stock YTD performance (as of 22 October 21).\nSE stock has been on a phenomenal run in 2021 so far. It also suffered from the growth-to-value rotation earlier in the year. However, those dips proved to be transitory, as its upward momentum recovered swiftly. Ever since its last significant dip in May, the stock's momentum has been on a tear. The other minor dips have also proven to be opportunities for investors to add its stock. At the moment, its YTD return has reached 78.5%. It also easily outperformed its peers and the market. SE stock has proven to be an incredible winner against its more prominent peers.\nTaking Account of Shopee's Aggressive Expansion\nShopee quarterly GMV. Data source: Company filings\nShopee LTM GMV. Data source: Company filings\nShopee has grown its gross merchandise value (GMV) very aggressively over the past year. At the end of 2020, it posted a GMV of $35.4B. By the end of H1'21, Shopee's LTM GMV reached $48.8B. Thus, its LTM GMV increased by an incredible 37.9% over 2 quarters. However, in our previous article (published on 13 August), we noted that Southeast Asia's top-6 countries' e-commerce GMV for 2020 was estimated at $62B. We also explained that even though the region is estimated to grow by a CAGR of 22.6% by 2025, its largest market, Indonesia, is estimated to experience slower growth. Indonesia's e-commerce market is estimated to grow by a CAGR of 19.1% through 2024.\nIn contrast, LatAm is still expected to experience tremendous growth. Its e-commerce market is expected to grow by a CAGR of 28.1% through 2024, with Brazil and Mexico as the region's most important growth markets.\nMELI LTM GMV. Data source: Company filings\nMercadoLibre, Inc. has also been expanding rapidly. Its LTM GMV in H1'21 grew by 22% from the end of FY20. It seems to be slower than SE's gangbusters growth momentum. Notwithstanding, its quarterly YoY GMV growth in FQ2'21 reached 39.2%. Hence, MELI's incredible growth momentum doesn't seem to be slowing down. It demonstrates the massive growth opportunities in LatAm's e-commerce market.\nSea Limited Understands Its Markets Well Through Garena\nSea Limited understands LatAm very well through its Garena gaming segment. Its Free Fire (FF) mobile battle-royale game has benefited tremendously from the removal of Fortnite from both the App Store (AAPL) and Google Play (GOOGL) (GOOG). Fortnite has previously been a keen competitor against Garena. With its exclusion from Apple's and Google's apps ecosystem for at least the next five years all but confirmed, Free Fire dominance is here to stay. Investors who don't understand gaming development well often consider FF's success as also its biggest challenge. It thinks FF will be replaced easily by other gaming genres or other games. But, the truth is top-performing games are tough to displace. They become even more entrenched as their users base increase. The barriers to entry to oust the top games are highly challenging. Beyond just the users base, top-quality games development also requires a long lead time.\nSea Limited has often reminded investors that they think FF is still very early in its life cycle. Worldwide gaming leader Tencent (OTCPK:TCEHY) also emphasized the challenge in developing \"original IPs.\" Tencent emphasized:\n\n Just one point to add, right. On the gaming side, I think you emphasized [the] point [of] new creation of IPs and true,\n is many years before you can see final product.I think if you look at our recent pipeline of games, which we have announced of more than 40 of them, I think it's a combination, right?\n Some are original IPs, which would take a very long time to develop.(from Tencent FQ1'21 earnings call)\n\nMobile games with the highest IAP from January to September 2021. Data source: AppMagic\nFF came in 8th in the ranking of mobile games with the highest in-app purchases (IAP) from January to September 2021. However, it's essential to consider that mobile games also have advertising revenue not covered in the IAP ranking.\nGarena quarterly revenue. Data source: Company filings\nGarena's revenue surpassed $1.8B in H1'21. Therefore, investors can quickly glean the immense monetization capability of Sea Limited's gaming segment. Notably, Free Fire is very strong in Google Play.\nBased on statistics from Sensor Tower, FF ranked #3 in worldwide downloads in Q3'21. However, the large majority of it stemmed from Android users. The top three markets by downloads in Google Play have consistently been India, Brazil, and Indonesia. Therefore, investors can easily understand why Shopee is targeting LatAm so aggressively. Garena acts not just as a cash flow machine to sustain Shopee's aggressive expansion but also as a flywheel to extend its leadership. Sea Limited has astutely used Garena's leadership's growing influence and financial prowess to expand its ecosystem and sharpen its edge.\nSensor Tower also highlighted that FF was the highest-grossing shooter game in Q3'21 worldwide. It easily outperformed Call of Duty: Mobile (ATVI) and Tencent's PUBG Mobile.\nGarena Average revenue per active user. Data source: Company filings\nGarena average revenue per paying user. Data source: Company filings\nWe think investors who are bearish on Garena's prospects don't understand its monetization capabilities and opportunities well. As Garena exceeded $1B in its quarterly revenue, it has also improved its average revenue per user (both paying and active) remarkably. Thus, we can observe a consistent trend of enhanced monetization. Notably, the opportunities to monetize users who are not paying are tremendous. On a per active user basis, its average revenue was just $1.41 in FQ2'21. However, the figure jumped to $11.11 on a per-paying user basis. Therefore, there are massive growth opportunities just by converting users into paying users.\nGarena paying users ratio. Data source: Company filings\nThat's precisely what Garena has been doing. The company has been consistently converting its non-paying users into paying ones. As a result, its paying users' ratio reached 12.7% at the latest FQ. We think the best is yet to come for Sea Limited's massive cash cow. There are still plenty of opportunities for Garena to milk its ever-popular FF game.\nSo, is Sea Stock a Buy Now?\nSea stock EV/NTM Rev valuation trend.\nSea Stock is currently trading at an EV/NTM Rev of 16.2x. Compared to its 1Y mean of 15.9x, Sea stock may seem to be fairly valued now. Our members in the service have also added Sea stock at the recent September/October retracement. We saw the opportunity to add SE stock at a reasonable margin of safety. Therefore, our members already have a decent buffer from its current price as of now. If readers choose to add SE stock now, you should understand that you are adding it at fair value. Therefore, you might not have the margin of safety that we often espouse for high-growth stocks.\nNevertheless, we are still optimistic about SE's long-term growth potential andwill rate the stock at Buy.","news_type":1,"symbols_score_info":{"SE":0.9}},"isVote":1,"tweetType":1,"viewCount":1132,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"CN","currentLanguage":"CN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":4,"subscribersOnly":false,"subscribersOnlyAccessible":false,"xxTargetLangEnum":"ZH_CN"},"commentList":[],"isCommentEnd":true,"isTiger":false,"isWeiXinMini":false,"url":"/m/post/858729823"}
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