To The Moon

Big tech companies have multiple businesses and they often fight among each other.

Given that Sea and Tencent just released their results, I want to compare how they have fared and get an overall sense of the market situation.

First, we can compare Sea and Tencent in terms of games.

Gaming contributed 31% of Sea's revenue in 2Q2022 while it is 53% of Tencent's.

Sea has seen declining gaming revenue since 3Q2021. The latest quarter saw gaming revenue declined by 39% compared to the same quarter last year.

Sea reasoned it is the post-Covid effect where demand for games dropped after the economy opened up.

In contrast, Tencent's gaming revenue didn't decline. It was just flat. Maybe one can argue that China is having lockdowns that helped.

Claiming Garena Free Fire is banned in India as an issue is not totally valid as Tencent's games such as Mobile Legends and PUBG face the same issue.

Gaming is the only profitable business segment for Sea and the declining revenue means less profits could be used to defray losses in Shopee and SeaMoney. Hence, this is one reason for their deepened loss in the latest quarter.

Next we compare Shopee against Lazada. These two are vying for the Southeast Asia e-commerce market.

Shopee did well by growing 51% year-on-year. Lazada only did 10% growth. Moreover Shopee is already having the biggest share in Southeast Asia.

Alibaba is mainly strong in China's e-commerce which is pretty much protected from foreign competition. The troubles are often internal - lockdowns, regulations and domestic competition.

Both Sea and Grab (with Singtel) have digital banking licenses in Singapore. Grab will be announcing their results on 25 Aug so we can't really do an apple-to-apple comparison with Sea Money now.

Both have great distribution channels for their fintech adoption. Sea has Shopee users to use the wallet. Grab has its ride hailing passengers and drivers to tap upon. Not to forget Singtel's customers too.

However the numbers showed that Sea has the upper-hand. Sea's digital financial services segment's revenue was $279m in 2Q while Grab's financial services was a mere $11m in 1Q.

In terms of GMV - Grab's $1.4b (1Q) is also lower Sea's $5.7b (2Q). The margins are a lot worse for Grab too.

In a nutshell, Sea is weaker than Tencent when it comes to gaming.

Shopee is stronger than Lazada but the fight is still ongoing.

Sea is stronger than Grab when it comes to digital payments.

$Sea Ltd(SE)$$TENCENT(00700)$$Alibaba(BABA)$$Grab Holdings(GRAB)$