Sea(US:SE)2025-11-12 02:20Summary of Sea Ltd. (SE) 3Q25 Earnings Review Company Overview - Company: Sea Ltd. (SE) - Market Cap: $98.4 billion - Enterprise Value: $93.6 billion - Current Price: $155.05 - Target Price: $218.00 - Upside Potential: 40.6% [1][2][3] Key Financial Highlights - 3Q25 Performance: - Gross Merchandise Value (GMV) increased by 8% quarter-over-quarter (qoq) and 28% year-over-year (yoy) to $32.2 billion [1][15] - Adjusted EBITDA was $258 million, with a margin of 0.6% of GMV [15][29] - Management raised FY25 GMV growth guidance from 20% to 25% [1][15] Core Business Insights Shopee (E-commerce Segment) - Growth Strategy: - Focus on growth and profitability, with an emphasis on service quality investments in logistics and VIP subscriptions [15][29] - Ads take rate increased by 80 basis points yoy to approximately 3% [15] - VIP subscribers reached 3.5 million (+75% qoq), contributing 10% of GMV in Q3 [15] - Logistics Investments: - Shopee is enhancing its logistics capabilities, offering multiple service tiers to cater to different customer segments [15] - Improved delivery times, with 1 in 3 parcels in Sao Paulo delivered next day [15] - Competitive Landscape: - Limited impact from competition in Brazil and Taiwan, with Shopee maintaining positive adjusted EBITDA [1][15][16] Garena (Gaming Segment) - Performance: - Outperformance driven by collaborations for Free Fire, achieving over 30% yoy bookings growth [2][21] - Gross billings grew by 27% qoq and 51% yoy [21] - User Engagement: - Strong uptick in user engagement for Free Fire and Arena of Valor, indicating positive momentum into Q4 [21][29] Fintech (Monee) - Loan Growth: - Loan book increased by 70% yoy to $7.9 billion, driven by product and geographical expansion [2][29] - Active users reached 34 million, with significant growth in Thailand and Brazil [29] Financial Estimates and Valuation - Revenue Projections: - Revenue estimates for 2025 increased to $22.57 billion, with adjusted EBITDA of $3.48 billion [30] - Valuation Metrics: - P/E ratio projected to decrease from 35.0 in 2025 to 20.2 in 2027 [3][8] - Free cash flow yield expected to decline from 6.7% in 2024 to 2.9% in 2025 [8] Risks and Considerations - Key Risks: - Increased competition, macroeconomic and regulatory risks, execution challenges in Brazil, and potential inability to derive synergies across segments [32][33] - Investment Thesis: - Sea Ltd. is positioned as a market leader in gaming, e-commerce, and digital finance in Asia, with significant growth potential in Latin America [34][35] Conclusion - Recommendation: - The company maintains a "Buy" rating, with a target price of $218, reflecting strong growth prospects and market leadership in its sectors [1][34]