The Amazon of Asia
If you think about the Amazon of Asia, most people would think it is Alibaba or JD.com.
But that is not the case. It is a Singaporean e-commerce company I have had on my watchlist for quite some time now, when it was at $85.
It is currently growing at a much faster rate than Amazon.com (AMZN).
This chart shows Sea Vs Amazon over the past five years.
Sea Limited’s Shopee e-commerce platform ranks among the top three most downloaded shopping apps worldwide. It’s the №1 e-commerce platform in Southeast Asia and in Taiwan in terms of average monthly active users.
But it wouldn’t be accurate to refer to Sea Limited as only an e-commerce company. Sea Limited generates its highest revenue in online gaming. The company’s Free Fire was the most downloaded mobile game worldwide in 2019 and was №3 globally in the second quarter of 2020. Sea Limited also claims a fast-growing digital payments business. Its SeaMoney mobile wallet is tightly integrated with Shopee and has been especially successful in Indonesia.
There is no doubt that Sea will be a stock that you must buy and hold for the next decade, as with good e-commerce companies, they are great growth stocks.
In addition, in order to facilitate its e-commerce growth, the company also launched a digital financial services business: SeaMoney. Though digital financial services only accounted for about 1.2% of revenues last quarter, the newest segment in the company’s empire grew 282% year over year.
This draws similarities with MercadoLibre and as MercadoLibre has shown digital financial services have huge potential to be big businesses in their own rights.
The company’s massive 7.5-times revenue growth over just the past five years is a testament to the vision of Li, who still owns 25.4% of its shares and holds 38.8% of the voting power.
Like every good growth stock, it is focusing more on growth and not profits hence it being in the red; but it has been decreasing its loss margins year after year.
With a highly invested, passionate founder-CEO, a large market opportunity, and a clear advantage over its rivals — at least at the moment — I wouldn’t be surprised if Sea Limited is a far larger company a decade from now, with a market cap in the hundreds of billions of dollars — maybe even above $1 trillion.
