We are long SE and have averaged up on SE over the past few months as we believe that they are just getting started.
Other than its popular ecommerce platform, SE's gaming vertical is also a high margin business unit that is just getting started. Coupled with its ambition in the fintech space, i think SE can continue to be a multi bagger for many investors over the next 2-5 years.
If you look at SE's earnings, every earnings they report very strong and impressive growth across all verticals - and they have achieved economies of scale where we expect their cost will continued to be reduced. :)
15 Dec 2020
Thank You for this!
I think personally, Sea group has been executing very well, and if you are a long term investor that views this business over the long run of 5 years or more, there is potential.
A little short summary of the company's profile:
It started with Garena first, which was a gaming platform that aimed to connect gamers around the world, with a primary focus on southeast asia. They started out by distributing third party games and soon, got the investment from Tencent, and a contract with the right of refusal for publishing games for Tencent. Then they created their own game which was free fire. The game has been a huge hit as seen from app annie rankings and on twitch as well.
In 2015 they started Shopee, an e-commerce marketplace platform that focused on the being mobile centric and targeting women's fashion products first. They have since been investing the profits from garena back into shopee on sales and marketing so as to grab market share from competitors. This has clearly been proven effective as they are the biggest e-commerce platform in southeast asia after 5 years, even outpacing competitors that entered the market earlier than them, such as Lazada and Bukalapak in Indonesia, as seen from google trends.
They have a payments business too, airpay where they operate e wallets and aims to push for digital payments. The digital payments is still a nascent business that is growing and the digital bank license definitely will help them to fuel their business.
The 3 businesses have very good synergies with one another and the total addressable market is huge as well. The management is strong on execution and have a long term view of their 3 businesses.
Mobile penetration rates across Southeast-asia is still low, and the total addressable market should grow as well as Southeast asia develops futher.
While the business has huge potential, there are certain risks as well such as over concentration of revenue from free fire, successful monetization of Shopee etc, and valuations are something to take note as well.
Hope it helps.
Disclaimer: I am not certified to give financial advice. Please do you own due diligence or research before investing. This is just my opinions and not a recommendation to do anything.
15 Dec 2020
Thank You for this detailed answer Yu Qi!
Sea got awarded the digital full bank licence.
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