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SE - Sea Limited: Primed For Market Share Expansion (Rating Upgrade)
Sea Limited American Depositary Shares each representing one Class A
2024-05-17 11:36:48 ET
Summary
Initially, concerns arose when Shopee increased its sales and marketing expenses, but Shopee exceeded expectations by accelerating revenue growth and improving operating losses through higher sales efficiency.
Garena's decline in revenue is due to the company's revenue recognition practices. Bookings grew by 12.2% QOQ, indicating a re-acceleration in growth, driven by increased spending and recovery in QAU.
SeaMoney's operating profit declined from 3Q23, as management increased investments in acquiring users.
Balance sheet has improved substantially and SE is generating positive operating cash flow.
Considering SE's improving fundamentals and resonable valuatoin, I've upgraded my rating from "hold" to a "buy"