Sea, the most valuable company in Southeast Asia pushes global expansion - The Average Joe

    Sea, the most valuable company in Southeast Asia pushes global expansion

    Victor Lei — Head of Research

    September 1, 2021

    sea southeast asia

    September 1, 2021

    Once your gaming company makes billions, what’s the next step? Launch a billion-dollar e-commerce company. That was Sea LTD’s game plan — becoming the most valuable company in Southeast Asia in the process.

    What’s next? World domination, starting with Latin America.

    Monster of a company

    Founded in 2009, Sea operates the largest gaming, e-commerce and fintech company in Southeast Asia.

    • Sea started as a gaming company and now funnels cash from its highly lucrative gaming division, Garena, into other business units.
    • In 2015, Sea launched its e-commerce unit, Shopee — which quickly overtook Lazada (owned by Alibaba) — and makes up 43% of Sea’s sales today.

    In 2017, SEA went public on the NYSE — one of the only SE Asian companies in the US market and an absolute growth monster:

    • Sales growth accelerated to 158% in the recent quarter — a tremendous growth rate for a company expected to make nearly $10b in sales in 2021.
    • Since going public, its stock is up a cool 1,874%.

    The bigger prize: Across the Atlantic

    With a $180m market cap, Sea is already nearly a tenth of Amazon’s size. Sea also operates in one of the fastest-growing e-commerce markets in the world:

    • Fast growth: SE Asia’s internet economy is expected to triple by 2025.
    • Non-stop growth: Despite COVID, online retail penetration is only at 5% compared to 13.6% in the US.

    But it’s not stopping there. In 2017, Sea expanded into Latin America (LA) with Free Fire, now the highest-grossing mobile game in the region. In 2019, Sea launched Shopee in Brazil.

    Latin America is the fastest-growing e-commerce market — growing 63% in 2020. Many global firms tried and failed to enter the LA e-commerce market, which is dominated by MercadoLibre (NASDAQ:MELI).

    • LA is one of the most competitive e-commerce markets in the world due to its complex tax system and bureaucracy, and poor transport infrastructure.
    • But Sea is showing early signs of success — with Shopee becoming the most downloaded e-commerce app in Brazil in 2021.

    Investors: Get ‘em while they’re distracted

    Chinese e-commerce companies are also racing for SE Asia’s e-commerce market but with the recent Chinese regulations tying their hands, Sea has its work cut out for it. With continued growth in SE Asia and Latin America on the rise, Sea is setting itself up for years of growth.

    Coming to the US market: Grab, the super app giant of SE Asia, is going public via SPAC, Altimeter Growth Corp (NASDAQ:AGC).

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