Sea(US:SE)2024-08-15 03:37Investment Rating - The report maintains a "Buy" rating for Sea (SE.US) and raises the target price to $87, reflecting strong growth across all business segments [3][5]. Core Insights - Sea's Q2 2024 performance exceeded market expectations, with revenue of $3.81 billion, a year-on-year increase of 23.0%, and adjusted EBITDA of $450 million, surpassing market forecasts by 12.9% [2]. - The e-commerce segment showed robust growth, with revenue of $2.82 billion, up 33.7% year-on-year, and a GMV increase of 29.1% to $23.3 billion [2]. - Digital financial services also demonstrated stable growth, with revenue of $520 million, a 21.4% increase year-on-year, driven by consumer and SME lending [2]. Financial Performance Summary - For FY24E, the projected revenue is $15.646 billion, with an adjusted net profit of $1.114 billion, reflecting a significant recovery from previous losses [4][6]. - The adjusted EBITDA for the e-commerce segment is expected to turn positive in Q3 2024, with an annual GMV growth rate projected at around 25% [2][3]. - The digital entertainment segment reported a revenue of $440 million, with a notable recovery in game revenue driven by the strong performance of Free Fire [2][4]. Market Position and Outlook - The competitive landscape in Southeast Asia's e-commerce market remains stable, with improving monetization rates and a forecasted positive EBITDA for the e-commerce business in the upcoming quarter [2][3]. - The report anticipates continued double-digit growth in game revenue for the second half of the year, supported by ongoing content updates for Free Fire [2][3].