211% YoY GROWTH ALERT

You JUMPED LATELY on $AMZN or $SHOP and look for GROWTH ABROAD

Here is a #ecommerce and #gaming stock UNDER THE RADAR OF BIG FINANCE that has experienced 211% growth in Q2 and 248% in Q1

Here is a SHORT & EASY thread

SEA Limited $SE previously known as Garena was founded in 2009 in Singapore

In 2017, TENCENT had a 40% stake. Together with the founders, they held 74% of votes

It started as an online gaming and social platform that enabled it users to discover and play games

It quickly morphed into a #Gaming (GARENA) #Ecommerce (SHOPEE) and #FinancialServices (AIRPAY) giant and as it IPOed in 2017

Garena counted 40m MAUs and ranked #1 player in digital entertainment in Greater South East Asia (population of 585m)

Shopee had over 9.8m MAUs and #1 in market share with 2.2 times the number of orders of closest competitor

AirPay Gross Transaction Value (GTV) totalled $ 472m for the first half of 2017

In 2017 $SE was a MONSTER IN THE MAKING What about 2020 ?

Let’s review Garena, Shopee and SeaMoney (prev. AirPay)

Garena generated $ 716m in sales up 62% from $ 443m the previous year

It counted 499m quarterly active users of whom 10% are paying - up 61% and 91% in the previous year

With 61% EBITDA margin, it generated $ 436m adjusted EBITDA

Garena’s sales are lead by Free Fire, League of Legends and a new entry into mobile games live streaming with Booyah

Free Fire is self-developed “battle royal” type of game while League of Legend is licensed by Riot games

Booyah is a new app that enables users to live stream mobile games - it already counts 10m installs and grew 101% over the last 60 days

Launching Booyah is a double win for Garena as it was made with Free Fire in mind. Read from Stefanie Yeo ( http://www.techinasia.com )

“The app was also designed with Garena’s mobile game Free Fire in mind. Players can connect their Free Fire accounts to Booyah, and the app will automatically generate highlight reels when a match is played.”

“The company also deploys its servers as close to its streamers as possible, setting up edge servers in Garena’s key markets to ensure the stable transmission of data. […] These initiatives eliminate lag, which is a universal cause of frustration for gamers and streamers [...]”

Garena is leading the KEY MOBILE GAMING MARKET

Mobile gaming revenue in SEA reached $ 3B in 2019 a 17% increase YoY

PC and console games in SEA reached $ 1.4B in 2019 a 6% increase YoY

Mobile games are set to reach $ 77B in sales in 2020 up 13% YoY

(from Newzoo)

South East Asia’s gaming market is consolidated with $SE, PUBG and $SNE leading the pack

Garena is #1 player and strategically placed to grow with its mobile first games such as Free Fire and Call of Duty Mobile

Garena can lock in its position as dominant player in games streaming with the launch of Booyah and the server infrastructure it deployed to support its live streaming capabilities

Let’s have a dive into #Ecommerce with Shopee

Revenue of $ 510m up 188% from $ 177m a year earlier

Operating loss of $ 344m - from a loss of $ 248m a year earlier

EBITDA from Garena is supporting the #Ecommerce expansion

Shopee is loosing cash but growing fast Here are the 4 largest markets

Indonesia (pop 261m) - Shopee 93m monthly web visits in Q2 (vs 71m in Q1) - Tokopedia at 83m in Q2 (70m in Q2)

Philippines (pop 101m) - Lazada 30m in Q2 (26m Q1) - Shopee 29m in Q2 (22m in Q1)

Vietnam (pop 93m) - Shopee 52m in Q2 (43m in Q1) - The Gioi Di Dong 25m in Q2 (28m in Q1)

Thailand (pop 69m) - Shopee 47m in Q2 (34m in Q1) - Lazada 35m in Q2 (33m in Q1)

Shopee is leaving competitors behind and the spread is widening over time

Who is Lazada Shopee’s main competitor?

Founded by RocketInternet - the German company behind Zalando

In 2016 $BABA took a controlling interest and replaced the CEO in 2017 with a $BABA executive, Lucy Peng

This CEO was then replaced by Pierre Poignant in 2018 who was then again replaced in 2020 by Chun Li

Despite this muscle chairs games at the top - Lazada is a company to track closely

With $SE, Shopee is well placed to capture a large share of the #Ecommerce market

Ecommerce Sales are set to reach $ 94B by 2024 - up from $ 54B in 2020

Penetration rate stands at 43% in 2020 and is set to reach 60% by 2024 - leaving plenty of untapped growth past 2024

Average revenue per user set to climb to $ 224 from $ 187 in 2020

( https://www.statista.com/outlook/243/643/ecommerce/southeast-asia#market-users)

SeaMoney - The fintech arm of $SE is just getting started

Revenue of $ 11.9m up 328% from $ 2.8m a year earlier

Adjusted EBITDA loss of $ 110m from a loss of $ 18.1m a year earlier

Again, EBITDA from Garena is supporting the #Ecommerce expansion

South East Asian Fintech market has HUGE growth potential

Revenues for digital financial services in SEA stood at $ 11B and a projected to grow to $ 38B by 2025

Share of underbanked OR unbanked adult population still stands at more than 70%

Gaming and #Ecommerce need #ePAYMENTS

Providing these mobile apps to the unbanked is key to sustain the meteoric rise of #Ecommerce and #gaming in SEA

Akin to what #WeChat & #Alipay are doing in China, $SE is integrating digital financial services with ShopeePay

Balance sheet check

$SE is sitting on a pile of $ 5.2B in current assets and has $ 2.9B in current liab.

Cash position is improving as $SE holds $ 4.1b in cash - coming from $ 3.1b the previous quarter

$SE generated Operating Cash Flows of $ 298m in Q2 ’20

The bottom line

Garena’s last game Free Fire and its new mobile streaming app Booyah are converting into big cash

Shopee’s leadership and widening lead in SEA is locking the market

SeaMoney is providing the payment app Garena and Shopee’s users require

The Key Risks

Gaming accounts for 55% of $SE sales. Momentum of some of these games might fade as competition from $NTDOY $TCEHY increases

If Garena’s games start to loose steam, $SE could fund its Shopee and SeaMoney expansion with its own cash for around 1.5 years

OUR TAKE

$SE is establishing itself as a key #eCommerce player in SEA and funding its expansion with its highly profitable #gaming activities

At the same time, $SE is building the financial apps required to provide banking services to the unbanked, unlocking a key bottleneck for the rise of #eCommerce and #Gaming

For now, we’re entering $SE with a medium stake

To be reviewed as Garena launches new games that provide the cash needed and as Shopee takes a definitive lead on Lazada

$MELI is on our watchlist To Be Reviewed SOON

Please note that this is not a recommendation to buy - You are responsible for conducting your own research

Hope you liked this thread!

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Here is a review for $SE - would love to hear your take the matter
@MadsC007
@james_carter89
@JonahLupton
@LiviamCapital
@kghufran
@trevmuchedzi
@dhaval_kotecha

Disclaimer - This is not investment advice in any form and investors are responsible for conducting their own research before investing.

Sources

✑ Investor presentation

✑ Company website

✑ Mordor Intelligence

✑ Newzoo

✑ AndroidRank

✑ TechInAsia

✑ http://iPrice.co.id 

✑ DashDevs

✑ KPMG

✑ The Abstract Investor on Seeking Alpha