Summary of Sea Ltd Conference Call Company Overview - **Company**: Sea Ltd - **Industry**: Consumer Technology in South & Southeast Asia - **Rating**: Outperform - **Price Target**: $170.00 (revised from $185.00) Key Points and Arguments 1. **Current Market Position**: Sea Ltd is viewed as an attractive investment opportunity despite recent AI-led stock price declines, which are seen as overreactions given the company's potential benefits from AI technologies [1][2] 2. **Stock Performance**: The stock has lost approximately 50% of its value, attributed to various market dynamics, including competition and margin concerns, leading to increased volatility [2] 3. **Competitive Landscape**: Analysis of pricing trends in five ASEAN countries indicates that while TikTok has increased its competitiveness in Indonesia, Sea has maintained a price advantage in other markets like the Philippines, Vietnam, and Malaysia [3][18] 4. **Earnings Estimates**: Earnings estimates for CY25 have been revised upwards by 1%, while CY26 estimates have been reduced by 3% due to changes in fintech margins [4][11] 5. **Revenue Projections**: Projected revenues for Sea Ltd are $21.5 billion in CY25 and $25.2 billion in CY26, reflecting growth rates of 27.9% and 17.1% respectively [9][40] 6. **Market Capitalization**: As of the close on February 4, 2026, Sea Ltd's market cap stands at $62.9 billion [6] 7. **User Engagement**: Monthly Active Users (MAUs) for Shopee have shown steady growth, while competitors like Lazada and Tokopedia are losing market share [24] Additional Important Insights 1. **Margin Improvement Potential**: Despite modest price cuts, rising take rates suggest that Sea's margins could improve in the upcoming quarters [3][18] 2. **Merchant Monetization**: Sea has been increasing its merchant commission rates across ASEAN and Brazil, indicating a focus on enhancing monetization strategies [28] 3. **Risks**: Key risks include dependence on the game FreeFire, competition in e-commerce, and challenges in scaling the fintech segment [46] 4. **Valuation Metrics**: The stock is currently trading at an adjusted P/E of 38.1 for CY25 and 28.7 for CY26, suggesting a valuation that reflects both growth potential and current market challenges [41] Conclusion Sea Ltd presents a compelling investment opportunity with a strong growth trajectory in revenues and user engagement, despite facing significant competitive pressures and market volatility. The adjustments in earnings estimates and ongoing efforts to enhance monetization strategies position the company favorably for future performance.

Core Insights - Chinese companies are embarking on a new wave of globalization, with a focus on localization as a key strategy for success in overseas markets [3][4] - The book "Breaking Waves" by Dr. Wang Yong outlines methodologies for Chinese enterprises to effectively enter global markets, emphasizing the importance of understanding local consumer needs and preferences [3][6] Group 1: Importance of Localization - Successful globalization for Chinese companies hinges on localization, as highlighted by leaders from companies like Pop Mart, TCL, and Hisense [3][6] - A lack of localization can lead to failure, as demonstrated by WeChat's struggles in the Indian market due to insufficient adaptation to local user preferences [4][5] Group 2: Understanding Local Consumers - Understanding local consumers is crucial; direct engagement is more effective than surveys [6] - Huawei's approach of meeting clients and documenting their needs serves as a model for gathering consumer insights [6] - Pop Mart's strategy in Southeast Asia, such as launching the "Little Wild" series in the Philippines, showcases effective cultural alignment [6][7] Group 3: Data Analysis - Chinese companies should prioritize data collection and analysis to understand local consumer demands [10] - TikTok's success in India was driven by analyzing user-generated content and adjusting its platform to reflect local cultural preferences [11][12][13][14] - OPPO's adaptation of its products based on after-sales data highlights the importance of understanding local usage patterns [16][18] Group 4: Building Local Teams - Establishing local teams can help overcome language and cultural barriers, as seen with Xiaomi's team in India [22][23] - Pop Mart's collaboration with local designers for product development exemplifies the benefits of local partnerships [24][25] Group 5: Product Development - Chinese companies must focus on localized product development to meet specific market needs [30] - The 4P model (Precision, Practice, Partner, Platform) is proposed for effective localization in product development [31] - Companies like Hisense emphasize the importance of R&D personnel engaging directly with consumers to inform product design [32][33] Group 6: Collaborating with Local Partners - Collaborating with local partners can enhance product relevance, as demonstrated by ZTE and Tencent's partnerships in Africa and Southeast Asia [41][42] - Protecting intellectual property during collaborations is essential, as highlighted by Huawei's practices [43][44] Group 7: Establishing R&D Platforms - Many Chinese companies are setting up local R&D centers to better understand and cater to market needs [48][49] - BYD's global R&D network illustrates the trend towards creating a collaborative and efficient innovation ecosystem [50][51]