Sea Limited: Still Worth Chasing Despite Recent Rally - Reiterate Buy

Seeking Alpha12-16

SummarySea Limited's successful reversal from the previous cash burn is driven by accelerating e-commerce sales, nascent advertising opportunities, and highly profitable Digital Financial Services/ ...

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romanc9
12-18
romanc9
Even if the gaming not making profit, the rest of tge biz sector under SE, are more than enough to cover the lost. Overall, the company is slowly but surely making more profit. SE should be atleast be 20 to 30% of the size in market cap to Amazon.

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Reiterate Buy</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: 11px; color: #7E829C; margin: 0;line-height: 11px;}\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: Still Worth Chasing Despite Recent Rally - Reiterate Buy\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-12-16 13:22 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4744205-sea-limited-still-worth-chasing-despite-recent-rally-reiterate-buy><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummarySea Limited's successful reversal from the previous cash burn is driven by accelerating e-commerce sales, nascent advertising opportunities, and highly profitable Digital Financial Services/ ...</p>\n\n<a href=\"https://seekingalpha.com/article/4744205-sea-limited-still-worth-chasing-despite-recent-rally-reiterate-buy\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"SE","symbol_name":"Sea Ltd","start_time":0,"source_url":"https://seekingalpha.com/article/4744205-sea-limited-still-worth-chasing-despite-recent-rally-reiterate-buy","article_id":"1125504861","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1125504861","pubTimestamp":1734326564,"columns":[],"sourceInfo":{"source_id":"lsy1728464409321","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"SummarySea Limited's successful reversal from the previous cash burn is driven by accelerating e-commerce sales, nascent advertising opportunities, and highly profitable Digital Financial Services/ En","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"SE":"Sea Ltd"},"translate_title":"Sea Limited：尽管近期上涨，但仍值得追逐-重申买入","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"SE":1.1},"content_text":"SummarySea Limited's successful reversal from the previous cash burn is driven by accelerating e-commerce sales, nascent advertising opportunities, and highly profitable Digital Financial Services/ Entertainment segments.The YTD outperformance and the management's promising guidance have also led to the raised consensus forward estimates through FY2026.This is also why SE's FWD PEG non-GAAP ratio of 1.18x is extremely cheap compared to its diversified commerce peers, offering interested investors with an improved margin of safety.Given the robust long-term prospects, we believe that the stock offers an excellent upside potential in the high double digits for opportunistic investors.Sea Limited Is Still Worth ChasingWe previously covered Sea Limited (NYSE:SE) in September 2024, discussing its successful reversal from the previous cash burn, significantly aided by the raised FY2024 guidance and promising consensus forward estimates.Much of its success was attributed to accelerating e-commerce sales, nascent advertising opportunities, and the highly profitable Digital Financial Services segment, with its investment thesis significantly aided by the cheap FWD PEG ratio - resulting in our reiterated Buy rating then.SE YTD Stock PriceTrading ViewSince then, SE has had a robust return of +50.5%, well outperforming the wider market at +11.8% and its diversified commerce peers to a large extent.Much of the tailwinds are attributed to the SE stock's (previously) overly discounted valuations, significantly aided by the company's increasingly profitable operations - particularly in the e-commerce segment's break-out to profitability for the first time in FQ3'24.These developments have already contributed to SE's robust FQ3'24 performance, with revenues of $4.3B (+13.1% QoQ/ +30.3% YoY), adj EBITDA margins of 12.1% (+0.3 points QoQ/ +1.5 YoY), and adj EPS of $0.75 (+141.9% QoQ/ +1775% YoY).The top-line driver remains the e-commerce segment without a doubt, with the robust revenues of $3.2B (+14.2% QoQ/ +45.4% YoY) and Gross Merchandise Value growth of $25.1B (+7.7% QoQ/ +25.2% YoY) further underscoring the Shopee platform's growing mindshare amongst consumers.This is on top of Shopee's market leading share at 48% in South East Asia, along with growing penetration in Brazil, Latam, with the latter already triggering the e-commerce platform's +40% YoY increase in average monthly active buyers while receiving \"recognition as the best shopping site in the Folha Top-of-Mind Award, which recognized brands with the best mind share among consumers in Brazil.\"While the company currently does not break out its advertising revenues, the management has already highlighted \"improved our monetization in both commission and advertising take rate this quarter,\" as it onboards more sellers by +10% YoY and grows ad-paying revenue per seller by +25% YoY.This is on top of SE's excellent execution across the two bottom-line drivers, Digital Financial Services segment at adj EBITDA margins of 30.5% (-1.2 points QoQ/ -6.6 YoY), with the moderation in profit margins merely attributed to its ongoing ramp up in other markets, including Indonesia, Thailand, Malaysia, and Brazil.The same has also been observed in the Digital Entertainment segment at adj EBITDA margins of 56.5% (+0.1 points QoQ/ +4.3 YoY), thanks to its growing quarterly active paying users at 50.2M (-2.3M QoQ/ +9.7 YoY) and average booking per users at $0.89 (+7.2% QoQ/ +8.5% YoY).Much of the success is naturally attributed to Garena's Free Fire game being rated as \"the #1 most downloaded mobile game in the world\" as reported by Sensor Tower, partly aided by the launch of new games, including Need for Speed Mobile and Delta Force in several countries.The robust outperformance across the different segments has directly contributed to SE's increasingly rich balance sheet at cash/ investments of $9.9B (+10% QoQ/ +25.3% YoY), with it underscoring its ability to sustainably invest in its growth opportunities ahead.The Consensus Forward EstimatesWith the management still reiterating their confidence of delivering their full year guidance of mid-twenties year-on-year GMV growth, building upon the YTD sum at $72B (+29.9% YoY), it is unsurprising that the consensus have upgraded their forward estimates.SE is now expected to generate an accelerated top/ bottom-line growth at a CAGR of +20.2%/ +82.5% through FY2026, compared to the original estimates of +14.2%/ +70.82% and the top-line growth at +65.6% between FY2018 and FY2023.SE ValuationsThese developments are also why we believe that SE is not overly expensive at FWD P/E non-GAAP valuations of 56.31x, compared to the 1Y mean of 39x and the sector median of 13.70x.Even when comparing SE's FWD PEG non-GAAP ratio of 1.14x to its well diversified commerce peers, including Amazon.com, Inc. (AMZN) at 1.92x, MercadoLibre (MELI) at 1.87x, and Shopify (SHOP) at 1.97x, it is undeniable that the former is extremely cheap here, offering interested investors with an improved margin of safety.So, Is SE Stock A Buy, Sell, or Hold?SE 3Y Stock PriceFor now, SE has charted an impressive tripling from the H2'23 bottom, with the stock also charting higher highs/ higher lows while running away from its 50/ 100/ 200 day moving averages.For context, we had offered a long-term price target of $183.00 in our last article, based on the consensus FY2026 adj EPS estimates of $4.39 and the FWD non-GAAP P/E valuations of 41.70x (not too far from its 1Y mean of 39x).Based on the LTM adj EPS of $1.38 ending FQ3'24 (-39.7% sequentially), it is apparent that SE has run away from our fair value estimates of $57.50.Even so, based on the raised consensus FY2026 adj EPS estimates to $4.77, there remains an excellent upside potential of +70.4% to our updated long-term price target of $198.90, despite the recent rally.If anything, readers must not forget SE's massive opportunities across e-commerce, financial services/ neo bank, gaming, and advertising in Asia and Brazil, Latam, given the region's lower penetration rate.This is especially since the South East Asia region's e-commerce market is projected to grow at a CAGR of +10.4% to $191.2B by 2029, digital financial services at a CAGR of +23.3% to $250B at the midpoint by 2030, gaming market at a CAGR of +6.7% to $7.1B by 2028, and advertising market at a CAGR of +15.3% to $50.1B by 2029, with it underscoring the diversified company's robust growth prospects over the next few years.As a result, we are maintaining our Buy rating for the SE stock.","kind":"news","is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[{"id":382970099081288,"gmtCreate":1734526911128,"gmtModify":1734527460649,"author":{"id":"4102495020619380","authorId":"4102495020619380","name":"romanc9","avatar":"https://static.tigerbbs.com/76bfe37245defa055adfff7453f1520f","vip":1,"hat":"https://static.tigerbbs.com/b073a07f77dbe6b3bec6b12311fde6bd","crmLevel":2,"crmLevelSwitch":1,"idStr":"4102495020619380","authorIdStr":"4102495020619380"},"htmlText":"Even if the gaming not making profit, the rest of tge biz sector under SE, are more than enough to cover the lost. Overall, the company is slowly but surely making more profit. SE should be atleast be 20 to&nbsp;30% of the size in market cap to Amazon.&nbsp;","listText":"Even if the gaming not making profit, the rest of tge biz sector under SE, are more than enough to cover the lost. Overall, the company is slowly but surely making more profit. SE should be atleast be 20 to&nbsp;30% of the size in market cap to Amazon.&nbsp;","text":"Even if the gaming not making profit, the rest of tge biz sector under SE, are more than enough to cover the lost. Overall, the company is slowly but surely making more profit. SE should be atleast be 20 to 30% of the size in market cap to Amazon.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/382970099081288","repostId":1125504861,"repostType":2,"repost":{"id":"1125504861","kind":"news","pubTimestamp":1734326564,"share":"https://ttm.financial/m/news/1125504861?lang=&edition=fundamental","pubTime":"2024-12-16 13:22","market":"us","language":"en","title":"Sea Limited: Still Worth Chasing Despite Recent Rally - Reiterate Buy","url":"https://stock-news.laohu8.com/highlight/detail?id=1125504861","media":"Seeking Alpha","summary":"SummarySea Limited's successful reversal from the previous cash burn is driven by accelerating e-commerce sales, nascent advertising opportunities, and highly profitable Digital Financial Services/ En","content":"<html><head></head><body><h2 id=\"id_4028726136\">Summary</h2><ul style=\"\"><li><p>Sea Limited&#39;s successful reversal from the previous cash burn is driven by accelerating e-commerce sales, nascent advertising opportunities, and highly profitable Digital Financial Services/ Entertainment segments.</p></li><li><p>The YTD outperformance and the management&#39;s promising guidance have also led to the raised consensus forward estimates through FY2026.</p></li><li><p>This is also why SE&#39;s FWD PEG non-GAAP ratio of 1.18x is extremely cheap compared to its diversified commerce peers, offering interested investors with an improved margin of safety.</p></li><li><p>Given the robust long-term prospects, we believe that the stock offers an excellent upside potential in the high double digits for opportunistic investors.</p></li></ul><h2 id=\"id_2787876730\">Sea Limited Is Still Worth Chasing</h2><p>We previously covered Sea Limited (NYSE:SE) in September 2024, discussing its successful reversal from the previous cash burn, significantly aided by the raised FY2024 guidance and promising consensus forward estimates.</p><p>Much of its success was attributed to accelerating e-commerce sales, nascent advertising opportunities, and the highly profitable Digital Financial Services segment, with its investment thesis significantly aided by the cheap FWD PEG ratio - resulting in our reiterated Buy rating then.</p><p><strong>SE YTD Stock Price</strong></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/bd1b51487d4724209b80aa7906ed9222\" alt=\"Trading View\" title=\"Trading View\" tg-width=\"640\" tg-height=\"357\"/><span>Trading View</span></p><p>Since then, SE has had a robust return of +50.5%, well outperforming the wider market at +11.8% and its diversified commerce peers to a large extent.</p><p>Much of the tailwinds are attributed to the SE stock&#39;s (previously) overly discounted valuations, significantly aided by the company&#39;s increasingly profitable operations - particularly in the e-commerce segment&#39;s break-out to profitability for the first time in FQ3&#39;24.</p><p>These developments have already contributed to SE&#39;s robust FQ3&#39;24 performance, with revenues of $4.3B (+13.1% QoQ/ +30.3% YoY), adj EBITDA margins of 12.1% (+0.3 points QoQ/ +1.5 YoY), and adj EPS of $0.75 (+141.9% QoQ/ +1775% YoY).</p><p>The top-line driver remains the e-commerce segment without a doubt, with the robust revenues of $3.2B (+14.2% QoQ/ +45.4% YoY) and Gross Merchandise Value growth of $25.1B (+7.7% QoQ/ +25.2% YoY) further underscoring the Shopee platform&#39;s growing mindshare amongst consumers.</p><p>This is on top of Shopee&#39;s market leading share at 48% in South East Asia, along with growing penetration in Brazil, Latam, with the latter already triggering the e-commerce platform&#39;s +40% YoY increase in average monthly active buyers while receiving &#34;recognition as the best shopping site in the Folha Top-of-Mind Award, which recognized brands with the best mind share among consumers in Brazil.&#34;</p><p>While the company currently does not break out its advertising revenues, the management has already highlighted &#34;improved our monetization in both commission and advertising take rate this quarter,&#34; as it onboards more sellers by +10% YoY and grows ad-paying revenue per seller by +25% YoY.</p><p>This is on top of SE&#39;s excellent execution across the two bottom-line drivers, Digital Financial Services segment at adj EBITDA margins of 30.5% (-1.2 points QoQ/ -6.6 YoY), with the moderation in profit margins merely attributed to its ongoing ramp up in other markets, including Indonesia, Thailand, Malaysia, and Brazil.</p><p>The same has also been observed in the Digital Entertainment segment at adj EBITDA margins of 56.5% (+0.1 points QoQ/ +4.3 YoY), thanks to its growing quarterly active paying users at 50.2M (-2.3M QoQ/ +9.7 YoY) and average booking per users at $0.89 (+7.2% QoQ/ +8.5% YoY).</p><p>Much of the success is naturally attributed to Garena&#39;s Free Fire game being rated as &#34;the #1 most downloaded mobile game in the world&#34; as reported by Sensor Tower, partly aided by the launch of new games, including Need for Speed Mobile and Delta Force in several countries.</p><p>The robust outperformance across the different segments has directly contributed to SE&#39;s increasingly rich balance sheet at cash/ investments of $9.9B (+10% QoQ/ +25.3% YoY), with it underscoring its ability to sustainably invest in its growth opportunities ahead.</p><p><strong>The Consensus Forward Estimates</strong></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/99a1541fd83491e459d636745b7217cf\" alt=\"\" title=\"\" tg-width=\"640\" tg-height=\"296\"/></p><p>With the management still reiterating their confidence of delivering their full year guidance of mid-twenties year-on-year GMV growth, building upon the YTD sum at $72B (+29.9% YoY), it is unsurprising that the consensus have upgraded their forward estimates.</p><p>SE is now expected to generate an accelerated top/ bottom-line growth at a CAGR of +20.2%/ +82.5% through FY2026, compared to the original estimates of +14.2%/ +70.82% and the top-line growth at +65.6% between FY2018 and FY2023.</p><p><strong>SE Valuations</strong></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/ba81c5377e2d8cb87a1fad5596a6c864\" alt=\"\" title=\"\" tg-width=\"640\" tg-height=\"161\"/></p><p>These developments are also why we believe that SE is not overly expensive at FWD P/E non-GAAP valuations of 56.31x, compared to the 1Y mean of 39x and the sector median of 13.70x.</p><p>Even when comparing SE&#39;s FWD PEG non-GAAP ratio of 1.14x to its well diversified commerce peers, including Amazon.com, Inc. (AMZN) at 1.92x, MercadoLibre (MELI) at 1.87x, and Shopify (SHOP) at 1.97x, it is undeniable that the former is extremely cheap here, offering interested investors with an improved margin of safety.</p><h2 id=\"id_600281895\">So, Is SE Stock A Buy, Sell, or Hold?</h2><p><strong>SE 3Y Stock Price</strong></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/f9841120f43b72be777c6b6136ab9c2d\" alt=\"\" title=\"\" tg-width=\"640\" tg-height=\"357\"/></p><p>For now, SE has charted an impressive tripling from the H2&#39;23 bottom, with the stock also charting higher highs/ higher lows while running away from its 50/ 100/ 200 day moving averages.</p><p>For context, we had offered a long-term price target of $183.00 in our last article, based on the consensus FY2026 adj EPS estimates of $4.39 and the FWD non-GAAP P/E valuations of 41.70x (not too far from its 1Y mean of 39x).</p><p>Based on the LTM adj EPS of $1.38 ending FQ3&#39;24 (-39.7% sequentially), it is apparent that SE has run away from our fair value estimates of $57.50.</p><p>Even so, based on the raised consensus FY2026 adj EPS estimates to $4.77, there remains an excellent upside potential of +70.4% to our updated long-term price target of $198.90, despite the recent rally.</p><p>If anything, readers must not forget SE&#39;s massive opportunities across e-commerce, financial services/ neo bank, gaming, and advertising in Asia and Brazil, Latam, given the region&#39;s lower penetration rate.</p><p>This is especially since the South East Asia region&#39;s e-commerce market is projected to grow at a CAGR of +10.4% to $191.2B by 2029, digital financial services at a CAGR of +23.3% to $250B at the midpoint by 2030, gaming market at a CAGR of +6.7% to $7.1B by 2028, and advertising market at a CAGR of +15.3% to $50.1B by 2029, with it underscoring the diversified company&#39;s robust growth prospects over the next few years.</p><p>As a result, we are maintaining our Buy rating for the SE stock.</p></body></html>","source":"lsy1728464409321","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: Still Worth Chasing Despite Recent Rally - Reiterate Buy</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: 11px; color: #7E829C; margin: 0;line-height: 11px;}\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: Still Worth Chasing Despite Recent Rally - Reiterate Buy\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-12-16 13:22 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4744205-sea-limited-still-worth-chasing-despite-recent-rally-reiterate-buy><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummarySea Limited's successful reversal from the previous cash burn is driven by accelerating e-commerce sales, nascent advertising opportunities, and highly profitable Digital Financial Services/ ...</p>\n\n<a href=\"https://seekingalpha.com/article/4744205-sea-limited-still-worth-chasing-despite-recent-rally-reiterate-buy\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"SE":"Sea Ltd"},"source_url":"https://seekingalpha.com/article/4744205-sea-limited-still-worth-chasing-despite-recent-rally-reiterate-buy","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1125504861","content_text":"SummarySea Limited's successful reversal from the previous cash burn is driven by accelerating e-commerce sales, nascent advertising opportunities, and highly profitable Digital Financial Services/ Entertainment segments.The YTD outperformance and the management's promising guidance have also led to the raised consensus forward estimates through FY2026.This is also why SE's FWD PEG non-GAAP ratio of 1.18x is extremely cheap compared to its diversified commerce peers, offering interested investors with an improved margin of safety.Given the robust long-term prospects, we believe that the stock offers an excellent upside potential in the high double digits for opportunistic investors.Sea Limited Is Still Worth ChasingWe previously covered Sea Limited (NYSE:SE) in September 2024, discussing its successful reversal from the previous cash burn, significantly aided by the raised FY2024 guidance and promising consensus forward estimates.Much of its success was attributed to accelerating e-commerce sales, nascent advertising opportunities, and the highly profitable Digital Financial Services segment, with its investment thesis significantly aided by the cheap FWD PEG ratio - resulting in our reiterated Buy rating then.SE YTD Stock PriceTrading ViewSince then, SE has had a robust return of +50.5%, well outperforming the wider market at +11.8% and its diversified commerce peers to a large extent.Much of the tailwinds are attributed to the SE stock's (previously) overly discounted valuations, significantly aided by the company's increasingly profitable operations - particularly in the e-commerce segment's break-out to profitability for the first time in FQ3'24.These developments have already contributed to SE's robust FQ3'24 performance, with revenues of $4.3B (+13.1% QoQ/ +30.3% YoY), adj EBITDA margins of 12.1% (+0.3 points QoQ/ +1.5 YoY), and adj EPS of $0.75 (+141.9% QoQ/ +1775% YoY).The top-line driver remains the e-commerce segment without a doubt, with the robust revenues of $3.2B (+14.2% QoQ/ +45.4% YoY) and Gross Merchandise Value growth of $25.1B (+7.7% QoQ/ +25.2% YoY) further underscoring the Shopee platform's growing mindshare amongst consumers.This is on top of Shopee's market leading share at 48% in South East Asia, along with growing penetration in Brazil, Latam, with the latter already triggering the e-commerce platform's +40% YoY increase in average monthly active buyers while receiving \"recognition as the best shopping site in the Folha Top-of-Mind Award, which recognized brands with the best mind share among consumers in Brazil.\"While the company currently does not break out its advertising revenues, the management has already highlighted \"improved our monetization in both commission and advertising take rate this quarter,\" as it onboards more sellers by +10% YoY and grows ad-paying revenue per seller by +25% YoY.This is on top of SE's excellent execution across the two bottom-line drivers, Digital Financial Services segment at adj EBITDA margins of 30.5% (-1.2 points QoQ/ -6.6 YoY), with the moderation in profit margins merely attributed to its ongoing ramp up in other markets, including Indonesia, Thailand, Malaysia, and Brazil.The same has also been observed in the Digital Entertainment segment at adj EBITDA margins of 56.5% (+0.1 points QoQ/ +4.3 YoY), thanks to its growing quarterly active paying users at 50.2M (-2.3M QoQ/ +9.7 YoY) and average booking per users at $0.89 (+7.2% QoQ/ +8.5% YoY).Much of the success is naturally attributed to Garena's Free Fire game being rated as \"the #1 most downloaded mobile game in the world\" as reported by Sensor Tower, partly aided by the launch of new games, including Need for Speed Mobile and Delta Force in several countries.The robust outperformance across the different segments has directly contributed to SE's increasingly rich balance sheet at cash/ investments of $9.9B (+10% QoQ/ +25.3% YoY), with it underscoring its ability to sustainably invest in its growth opportunities ahead.The Consensus Forward EstimatesWith the management still reiterating their confidence of delivering their full year guidance of mid-twenties year-on-year GMV growth, building upon the YTD sum at $72B (+29.9% YoY), it is unsurprising that the consensus have upgraded their forward estimates.SE is now expected to generate an accelerated top/ bottom-line growth at a CAGR of +20.2%/ +82.5% through FY2026, compared to the original estimates of +14.2%/ +70.82% and the top-line growth at +65.6% between FY2018 and FY2023.SE ValuationsThese developments are also why we believe that SE is not overly expensive at FWD P/E non-GAAP valuations of 56.31x, compared to the 1Y mean of 39x and the sector median of 13.70x.Even when comparing SE's FWD PEG non-GAAP ratio of 1.14x to its well diversified commerce peers, including Amazon.com, Inc. (AMZN) at 1.92x, MercadoLibre (MELI) at 1.87x, and Shopify (SHOP) at 1.97x, it is undeniable that the former is extremely cheap here, offering interested investors with an improved margin of safety.So, Is SE Stock A Buy, Sell, or Hold?SE 3Y Stock PriceFor now, SE has charted an impressive tripling from the H2'23 bottom, with the stock also charting higher highs/ higher lows while running away from its 50/ 100/ 200 day moving averages.For context, we had offered a long-term price target of $183.00 in our last article, based on the consensus FY2026 adj EPS estimates of $4.39 and the FWD non-GAAP P/E valuations of 41.70x (not too far from its 1Y mean of 39x).Based on the LTM adj EPS of $1.38 ending FQ3'24 (-39.7% sequentially), it is apparent that SE has run away from our fair value estimates of $57.50.Even so, based on the raised consensus FY2026 adj EPS estimates to $4.77, there remains an excellent upside potential of +70.4% to our updated long-term price target of $198.90, despite the recent rally.If anything, readers must not forget SE's massive opportunities across e-commerce, financial services/ neo bank, gaming, and advertising in Asia and Brazil, Latam, given the region's lower penetration rate.This is especially since the South East Asia region's e-commerce market is projected to grow at a CAGR of +10.4% to $191.2B by 2029, digital financial services at a CAGR of +23.3% to $250B at the midpoint by 2030, gaming market at a CAGR of +6.7% to $7.1B by 2028, and advertising market at a CAGR of +15.3% to $50.1B by 2029, with it underscoring the diversified company's robust growth prospects over the next few years.As a result, we are maintaining our Buy rating for the SE stock.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":7,"commentSize":1,"repostSize":1,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/1125504861"}