Corporate Analysis Sea Ltd. – Global E-Commerce Market

Sea Ltd Overview

Sea Limited(LTD) is a consumer internet company. The company has an integrated platform through several divisions, Garena in digital entertainment, Shopee in e-commerce, and SeaMoney in digital financial services and is a market leader in the territory. Sea LTD operates fast and has become the dominant player in Southeast Asia with a market of 670 million people. The company is backed by Chinese giant Tencent which owns almost 20% of Sea shares after taking a 3.3 million share stake in 2017.

 Sea Ltd Founder

Source: Sea Limited

Forrest Xiaodong Li –  the founder, chairman and chief executive officer of Sea Limited

Before founding Sea Ltd, Forrest worked for MTV Networks on digital media development. Before that, he was in the U.S. for MBA study at Stanford University. Prior to Business school, he worked for Motorola in China. In 2009, Forrest started Garena, a community for gamers worldwide. He was inspired by the idea that “Connecting world gamers”. Interactive games are evolving into an important entertainment format in our daily life. For young generation, it may be even more important than TV, radio, or movie. Forrest believes that interactive game will be beyond entertainment, with its increasing social and economic influence. On the other hand, he believes interactive game is something that all human being understand and enjoy, across countries, races, languages and religions, etc. It can be a common language to bring everybody together for better mutual understanding. Garena can help accelerate this trend through innovative products and services.

Forrest Li and Tencent owned an aggregate of 63.0% of the total voting power of ordinary shares. As a result, Forrest Li and Tencent have substantial influence over the business, including significant corporate actions such as mergers, consolidations, sales of all or substantially all of the assets, election of directors and other significant corporate actions.

Sea Ltd Executive team

Forrest Li

Chairman and Group CEO

Gang Ye

Director and Group COO

Gang Ye is the co-founder and has been a member of the board of directors since March 2010. Gang has served as group chief operating officer since January 2017 and served as group chief technology officer between March 2010 and December 2016. He previously worked at Wilmar International and the Economic Development Board of Singapore.

Tony Hou

Director and Group CFO

Tony Hou joined in September 2010 and has served as group chief financial officer since January 2013. Before joining Sea Ltd, Tony was an audit senior manager at Ernst & Young, where he worked from October 2000 to September 2010 in both China and the U.S.

Yanjun Wang

Group Chief Corporate Officer

Yanjun Wang is Sea’s Group Chief Corporate Officer, Group General Counsel and Company Secretary. Yanjun oversees the group corporate functions of communications, corporate development and strategy, investor relations, legal, and public policy.

Sea Ltd Board of Directors

Forrest Li, Gang Ye, Tony Hou (also serve in the executive team)

Yuxin Ren


Yuxin serves as Independent Director of the Company. Yuxin is the chief operating officer at Tencent Holdings Limited and is currently leading the development of the Platform & Content Group and the Interactive Entertainment Group. Also, Yuxin currently serves as a director or officer of certain subsidiaries of Tencent Holdings Limited.

David Heng Chen Seng


Heng Chen Seng serves as Independent Director of the Company. David has been the chief executive officer of ABC World Pte. Ltd., a private equity fund, since February 2019. He had held several senior positions at Temasek from 2003 to 2018, including joint head of consumer, head of real estate investment, joint head of China and head of Japan and Korea, and left Temasek as a senior advisory director in January 2019.

Khoon Hua Kuok


Khoon Hua Kuok serves as Independent Director of the Company. Khoon Hua is the chairman of Kerry Holdings Limited, the main investment holding company of the Kuok Group in Hong Kong. He is also a director of Kerry Group Limited and Kuok (Singapore) Limited, the executive chairman of Kerry Logistics Network Limited and the vice chairman and chief executive officer of Kerry Properties Limited, both of which are companies listed on the Hong Kong Stock Exchange, and a non-executive director of Wilmar International Limited, a company listed on the Singapore Stock Exchange.

Product Positioning of Sea Limited

Shopee: Sea LTD’s E-commerce platform

Shopee is the leading e-commerce solution in Southeast Asia by gross merchandise volume with the closest competitor being Alibaba’s Lazada. Gross merchandise volume grew by 74.3% in Q1 to $6.2 billion and was accelerated by COVID-19. The number of buyers and sellers increasing on the platform strengthens the network effect and makes it an obvious choice for shoppers in the region. The platform is holding the line against Alibaba and Lazada, through aggressive promotions and subsidies (including free shipping and financial support for sellers), which have led to it being unprofitable.

The company’s ability to successfully expand into e-commerce over the long term is a huge opportunity going forward. Shopee registered accelerating growth as it locks more shoppers into its platform. As a result, its adjusted revenue as a percentage of its total gross merchandise volume, like other larger Asian tech companies, Sea’s e-commerce and gaming businesses both gained momentum throughout the COVID-19 crisis. Social distancing measures and shutdowns boosted Shopee’s online sales, and people played more games as they stayed at home.

SeaMoney: Sea LTD’s innovative payment system

Similar to Amazon and Shopify and other e-commerce platforms, Sea Ltd developed and integrated a payment system – SeaMoney – with its e-commerce business. The company operates in a region where many don’t have credit cards, and credit card payments are falling behind e-payments, and SeaMoney has emerged as a leading digital payments and financial services provider in Southeast Asia.

SeaMoney services products offered under AirPay, ShopeePay, ShopeePayLater, and other brands in the region. Total payment volume crossed the $1 billion mark for the first time, roughly a year after integrating it with the Shopee platform. Total paying users amounted to 10 million people that considers the financial context in which the company operates will likely support the adoption of its e-commerce and other platforms.

Garena: Sea LTD’s gaming business

Unlike, its e-commerce platform that is still unprofitable due to aggressive marketing and promotion subsidies, Sea Limited’s gaming platform Garena has been profitable. Garena offers licensed games from Tencent, as well as first-party games.

Garena has seen exponential growth which has offset Shopee’s losses. It has rapidly emerged as the region’s largest digital entertainment company by revenue. The digital entertainment segment makes up over half of Sea Ltd revenue with its game “Free Fire” hitting 80 million daily active users. “Free Fire” was the highest-grossing mobile game in Latin America and Southeast Asia.

Market Research

Southeast Asia market:

There are 11 countries in Southeast Asia with a total population of about 650 million. Among them, people in the 20-45 age group account for more than 45% of the total population, and 87% are located in 6 countries, namely Singapore, Malaysia, Thailand, Indonesia, Philippines and Vietnam, with high internet penetration rate..

Target customers:

Among the 650 million people in Southeast Asia, about 52% are under 30 years old, and the majority are born after the year 2000. Indonesia is the world’s fourth most populous country with 260 million people, with 63% of the population under 30. At the same time rely heavily on mobile devices for consultation, mobile games, shopping and are eager for efficient solutions.

Internet users in Southeast Asia spend more than 4 hours on mobile on average every day.

The potential for market development for the Internet with the current environment in Southeast Asia is also gradually improving. The popularity of smart phones has promoted the demand for users to access the Internet on mobile phones.

Risk Factors of Sea Limited

Business Risk

Business risk is any exposure a company has that may lower its profits or cause it to go bankrupt. Sea Limited has a history of net losses ($561.2 million, $961.0 million and $1,457.7 million in 2017, 2018 and 2019, respectively). The increasing loss is caused by increased operating expenses on marketing efforts for Shopee and SeaMoney. The history of operating all three businesses together is relatively short, so the synergic effect is uncertain.

A significant portion of revenue and gross profit come from a limited number of online games licensed to them by third-party game developers. If they lose the license for any of these games, there could be an adverse effect on their operations.

Market Risk

Market risk is the risk of losses arising from movements in market prices.

The market risk faced by Sea Ltd is the foreign exchange risk. Foreign currency exchange rates for currencies in some of their markets have experienced substantial volatility. It is difficult to predict how market forces or the government policies in those markets may impact the exchange rates against the U.S. dollar in the future.

Acquisition Assessment of Sea Limited

Acquisition of Foody

Background of Foody: Founded in 2012, Foody is one of the most successful start-up stories in Vietnam. This Vietnam-based company provides restaurant review and helps customers find food and dining experiences. In 2016, Foody launched an on-demand food delivery service app.

In July 2017, Sea Limited acquired 82% of Foody Corporation for around $64 million. Sea limited intended to take advantage of investment opportunities and purchase strategies to develop customer database, enhancing market penetration and continuing to complement subsidiary services and products.

Acquisition of Phoenix Labs

Background of Phoenix Labs: Founded in Vancouver in 2014 by veteran game executives with a track record of working on some of the world’s best-known game franchises. It now has a team of more than 100 developers with decades of experience in building world-class AAA games across its offices in Vancouver, Canada, San Francisco, and Seattle, Washington. The studio launched its debut title Dauntless, a cross-platform co-op action RPG, in 2019.

On January 28th, 2020, Sea limited announced that its digital entertainment arm, Garena, has 100% acquired Phoenix Labs. Garena is a global leading games developer and publisher. It had more than 320 million quarterly active users in the third quarter of 2019. Garena was one of Phoenix Labs’ earliest investors and has supported the growth of the company.s.

These increases were mainly driven by the growth in each of the segments detailed as follows:

• Digital Entertainment: This increase was primarily due to the increase in our active user base as well as the deepened paying user penetration, and in particular, the continued success of our self-developed game Free Fire.

• E-commerce and other services: Revenue increased This increase was primarily driven by the growth of e-commerce marketplace, and positive developments in each marketplace revenue streams – transaction-based fees, value-added services, and advertising.

• Sales of goods: Revenue increased primarily due to the increase in product offerings.

Index performance of Sea Limited

Sea LTD has also benefited greatly from the revenue growth and monetization caused by the pandemic. During the COVID-19, Sea LTD still maintained rapid growth. Pandemic-related growth will not only last for a few months but may continue into the next few years. Electronic games are a highly involved activity, the vast majority of users will almost certainly continue to participate.

The e-commerce boom will be more likely to continue. Once the pandemic is over, the convenience and comfort of the e-commerce experience will almost certainly accelerate the growth of the business, which will not only keep the attracted users on the Shopee platform but may also increase their consumption in other categories.


Industry average valuation multiples

  • It’s important to compare the company’s P/E ratio with the industry average because a P/E ratio lower than industry average reveals stock may be undervalued.
  • SE is unprofitable, so we can’t compare its PE Ratio to the US market.

Brand Positioning of Sea Limited

Sea LTD is often referred to as a “game and e-commerce company.” Its main businesses, the digital entertainment business and the game business is the largest source of revenue, and it is the only profitable segment. The e-commerce business is Sea LTD’s fastest growing one, but also the business with the highest investment cost.

Backed by Tencent and China

In terms of business, most of the games it represents are products of Chinese game companies; in terms of capital, Tencent and Hillhouse Capital are its most important investors, and it is supported by Tencent in Southeast Asia. Tencent participated in Sea LTD’s multiple rounds of financing and became Sea’s major shareholder, holding a 39.8% stake in Sea LTD. In addition to providing capital support, Tencent will also give away its game resources. Sea LTD will have a five-year priority to release Tencent’s mobile and PC games in Singapore, Malaysia, Thailand and other regions..

SWOT Analysis of Sea Limited


According to the US Stock Research Agency, Sea Limited is favored by investors because its three core businesses are market leaders.

a) Shopee: Established at the end of 2015, it is the number one e-commerce platform in the region based on order volume and GMV (and also number one in the markets it operates in Indonesia, Taiwan, Vietnam, Thailand, the Philippines and Malaysia). In 2018, platform GMV reached 10.3 billion US dollars.

b) Garena :Established in 2009, it is the number one online game developer and publisher in the region. FreeFire, the first self-developed game, has 300 million registered users, becoming a phenomenon-level product. At the same time, it is also the exclusive publisher of Arena of Valor, a multiplayer online competitive game co-developed with Tencent.

c) Airpay: Established in 2014, it is the only electronic payment service provider in the region that has payment licenses in the four major markets of Southeast Asia, Indonesia, Thailand, Vietnam and Malaysia. It has a complete offline channel that serves unbanked users and provides payment services to the user groups of Shopee and Garena within its ecosystem.

The shareholders behind Sea Limited are very strong. They have not only received investment from the son of the richest man in Indonesia and the richest man in the Philippines, John Gokongwei, but are also developing in the process, the domestic Internet giant Tencent escorted it, and its largest shareholder, Tencent’s shareholding ratio reached 39.7%. Tencent’s strategic direction is of inestimable value for Sea in many aspects. Given the influence of WeChat Pay in China, Tencent provides important expertise and direction to provide meaningful guidance for Sea Ltd. to eventually create a strong payment business system in Southeast Asia.


1. Sea Limited is still in the early stage of burning money investment, operating and operating costs remain high.

2. Paid users have achieved year-on-year growth, but it is still difficult to achieve high conversions in the short term.

At present, users in Southeast Asia have an increasing demand for mobile phones, but due to the per capita income level, for users in this market, their consumption on the Internet is actually restricted by economic conditions. This is why it is difficult for Sea Limited to greatly increase the fees earned by each user in the short term, whether it is e-commerce or games. Especially now that e-commerce platforms are adopting low-price strategies, under the influence of price wars, it is estimated that they will continue to burn money to grab the market for a period of time.


1. Huge growth potential. The growth potential of the Internet economy in the Southeast Asian market is huge, and Sea Limited, which has already deployed in the fields of e-commerce, social networking, gaming, and electronic payment, does contain huge business opportunities. At present, the businesses it develops are all high frequency, which has the potential to drive young users’ consumption in the future. Once user stickiness increases, the subsequent commercial value generated is worth looking forward to.

2. Further monetization opportunities. The key to achieving this goal lies in the continuous user attraction and acquisition of e-commerce businesses. If the above situation is true, payment monetization within and outside the platform will organically promote the growth of payment business. Based on some of Sea Ltd.’s initiatives in bank license approval, it is very likely that mobile payment and digital lending services will account for a considerable part of its total business revenue in the future.


Sea Limited’s e-commerce business faces strong competitions. At present, the Internet companies that can compete with Sea ltd. in terms of business development are none other than Lazada. These two platforms are also among the best unicorns in the Southeast Asian market. In 2016, Alibaba invested in Lazada, a Southeast Asian e-commerce platform, bringing the entire Alibaba Ecological Group’s rich e-commerce resources, recreating the entire Lazada technical backend and brand-new client apps to serve consumers in Southeast Asia smoothly.

The development of Sea Limited’s e-commerce business in the Southeast Asian market not only faces local rival Lazada, but also global e-commerce platform Amazon. As these top platforms have fierce competition for the market share of e-commerce business, subsequent business growth will be more difficult for Sea Limited.

Sea Limited Competitive Analysis Globally

Competitors in Asia

  • Lazada

Lazada is the number one online shopping and selling destination in Southeast Asia – present in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. It helps more than 100,000 local and international sellers as well as 2,500 brands serve the 560 million consumers in the region through its marketplace platform, supported by a wide range of tailored marketing, data, and service solutions. They offers an excellent customer experience through a wide network of logistics partners and its own first- and last-mile.

  • Tokopedia

Tokopedia is an online marketplace that allows individuals and small & midsize business owners to open and maintain their own online store easily and free, while providing a better and safer online shopping experience to their customers. It empowers millions of merchants and consumers to participate in the future of the economy. Our services have enabled millions of individuals, MSMEs and business owners in Indonesia to sell products to customers throughout Indonesia.

  • Zalora

ZALORA is an e-commerce platform and website that provides fashion and footwear products. It provides users with clothing and footwear from fashion labels such as Mango, Nike, Puma, Casio, Calvin Klein, Levi’s, and more. Users can view images of their desired fashion product and purchase it online. It also provides users with fashion tips and advice. In addition, it offers users with an online magazine and discounts. It was launched in March 2012, based in Ho Chi Minh City, Vietnam.

  • Taobao

Taobao is a shopping marketplace for consumers in China. Founded by parent Alibaba Group, it facilitates transactions between individual consumers and a wide range of sellers such as retailers, wholesalers, and other individuals. Similar to eBay, sellers are able to post new and used goods for sale on the Taobao marketplace either through a fixed price or negotiated sale or by auction.

Competitors in the US

  • Amazon

Amazon is an international e-commerce website for consumers, sellers, and content creators. It offers users with merchandise and content purchased for resale from vendors and those offered by third-party sellers. Operating in North American and International markets, Amazon provides its services through websites such as amazon.com and amazon.ca. It also enables authors, musicians, filmmakers, app developers, and others to publish and sell content via its branded websites.

  • Ebay

eBay is an online marketplace. The platform connects millions of buyers with sellers globally utilizing PayPal to ensure secure transactions. eBay products can be sold either via a silent auction in which users are able to input the maximum price they are willing to pay and for which the site will automatically increase bids as necessary up to that maximum, or via the Buy It Now feature that enables its users to purchase items at a set price. Its featured products are categorized as fashion, hope and garden, electronics, motors, collectibles, antiques and visual art, stationery, electronics, and more.

Competitors in Europe

  • John Lewis

John Lewis is a retailer that operates department stores, home stores, supermarkets, and convenience stores in the United Kingdom and internationally. Its current offering spans across 41 shops and through its growing online business johnlewis.com, offering international delivery to over 30 countries. John Lewis was launched in 1864 and is based in London, the United Kingdom”.

  • Zalando

Zalando is a European online fashion platform- offering a broad assortment of fashion for men, women and children. It carries over 1.500 brands and over 150.000 product choices for over 17 million customers in 15 countries. By constantly optimising its processes and platform offerings, using its e-commerce expertise and lots of can-do spirit, Zalando has become Europe’s leading online fashion retailer in only a few years. Its goal is to create the world’s best online fashion experience. The cores of its business are what the company focuses on, always striving to be cutting-edge in fashion, technology, marketing, and logistics.


Lions Financial works with companies in the growing Ecommerce industry. We also support companies in the areas of management consulting and refining business plans for venture capital financing. For companies in the different sectors of the E-commerce industry we support issues around Due Diligence, Valuations, Mergers and Acquisitions, and Business Exits. To find out more about how we can help you contact us https://lions.financial/contact/

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Lions Financial supports companies globally with their business management considerations for growth and operational efficiency. With the growth of the E-Commerce industry we also focus on providing services in business plan development, HR Consulting, and Financing needs. The industry has become global and in our case studies we like to look at the growth in different regions. We provide an overview of Sea LTD Risk Factors, Acquisition Assessment,Product Positioning, Market Researchteam,Founders, Executive Board of Directors, Index performance, Industry average valuation multiples, Brand Positioning SWOT Analysis, Competitive Analysis Globally, and Additional Financial Information. Established in 2014, SeaMoney is a leading digital payments and financial services provider in Southeast Asia. Moreovre, SeaMoney’s mission is to better the lives of individuals and businesses in our region with financial services through technology.

The sources we use for this information include:









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