Sea Ltd is a technology company based in Singapore, with operations across gaming (Garena), e-commerce (Shopee) and financial services (Sea Money).
Sea LtdNovember 22, 2020
Thesis - I first mentioned Sea Ltd in edition 1 of this newsletter, when it was valued at $50b. In just 4 months it has almost doubled in value. Sea is a high-growth company focused on South East Asia, with verticals in gaming and e-commerce.
Update - The third pillar to its business is Sea Money, its digital payments business. Having grown its e-commerce platform, Sea Money was a natural next step, enabling its customer to use its native payment processor. Last quarter, 30% of gross orders on Shopee were paid using a Sea Money mobile wallet. As Sea continues to grow its gaming and e-commerce divisions (both experiencing 100% growth), Sea Money will likely process an increased volume of payments. They have applied for a full digital bank license in Singapore and are on the shortlist for two licenses available this year.
Financials & Performance- Looking specifically at SeaMoney, total payment volume reached $2.1b last quarter, with over 17.8m paying users for the mobile wallet. Currently, SeaMoney only accounts for around 10% of Sea Limited’s revenue. But whilst it is the smallest part of the business, it is also the fastest growing. Only the gaming division is currently profitable, but with total revenue growth of 99% and growing market share, the future financial profile seems positive.
Leadership - Sea Ltd’s CEO and founder is Forrest Li. Forrest studied engineering in Shanghai, then did an MBA at Stanford. He believes in order to succeed in South East Asia, the products should be localised in each market. For example, the Free Fire game (from Garena, their gaming division) was build for low internet environments. Furthermore, it includes local landmarks so that players can see their own cities in the game. This approach is helping them to win market share in a region that has large markets like Indonesia, Taiwan and Thailand.