Sea’s soaring sales has brought it close to reclaiming its title as Southeast Asia’s most valuable company, with the stock’s 19% jump in New York on Tuesday leaving its market capitalization near that of DBS Group Holdings.
The Singapore-based e-commerce company is now valued at US$103 billion, compared with US$113 billion for DBS, the regional banking giant based in the same city. Sea posted sales that topped estimates on Tuesday, as more of Southeast Asia’s consumers turn to online shopping for anything from iPhones to daily groceries.
The results assuage some worries about the prospects of e-commerce arm Shopee, Sea’s biggest unit. The region’s top online retail platform is battling deep-pocketed global challengers including ByteDance’s TikTok Shop and Alibaba Group Holding’s Lazada. Emerging players like Shein and PDD Holdings’s Temu are also looking to break into the emerging region of 675 million people where more and more shoppers are coming online.
The results “help dismiss earlier concerns on growing competition,” Citigroup analysts led by Alicia Yap said in a note. Sea showed “encouraging improvement in user conversion, purchasing frequency, basket size, seller adoption to ads and thriving live streaming and short video content ecosystem.”
Revenue rose 38% to a record US$5.26 billion in the three months through June, topping the US$5 billion analysts estimated on average. Shares of Sea had their biggest gain in more than two years and closed at their highest level since early 2022.
To attract users, Sea has focused on improving customer experience by building its own in-house delivery network, called SPX Express. That effort helped boost e-commerce gross orders and gross merchandise value by almost 30% during the latest quarter. SPX now handles the majority of Shopee’s billions of parcels annually.
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“We expect Sea’s strong competitive edges to continue supporting its earnings growth,” Jian Xiong Lim, an analyst at CFRA Research, said in a note. These include Sea’s “well-developed delivery network and logistics facilities.”
To boost its bottom line, Shopee has been steadily raising the commissions it charges merchants in various core markets by about a third since the start of last year. The hikes, which bring Shopee’s fees above its rivals, show that Sea is confident it can attract and retain merchants, helped by a broad user base and well-established delivery services. Shopee’s second-quarter revenue rose 34% to US$3.8 billion, thanks in part to surging commissions and ad revenue.
Sea is also betting on new initiatives including digital finance to grow its dominance and convince investors of its growth potential. Its finance arm — now known as Monee — increased sales 70% last quarter to US$882.8 million. Bookings at gaming division Garena rose 23%.
“In the past, cash flow from Sea’s gaming arm Garena was used to grow Shopee and Monee, but now Shopee and Monee are in healthier capital positions,” Hussaini Saifee, an analyst at Maybank Securities, said before the results. “Sea can now invest in further developing Garena which has also made a strong rebound over the last year and a half.”
