Sea predicts sales doubling as online shopping boom persists

Popular platform: Sea forecasts 2021 revenue at Shopee of US$4.5bil to US$4.7bil, up from US$2.2bill in 2020. — Reuters

SINGAPORE: Sea Ltd expects e-commerce revenue to double in 2021, sustaining its torrid pace of growth as South-East Asia’s most valuable company counts on regional online shopping demand to persist after the pandemic.

Revenue rose to US$1.6bil in the last three months of 2020 from US$777.2mil a year earlier, Singapore-based Sea said in a statement. Net loss widened to US$523.6mil from US$283.8mil.

Sea, backed by Tencent Holdings Ltd, has emerged as a stock-market sensation since its initial public offering in New York in 2017, as investors bet the company can establish itself as a leader in e-commerce and gaming in South–East Asia.

Among companies valued at US$100bil or more, the stock is the No. 1 performer in Asia since the start of last year and only trails Tesla Inc globally.

It’s also trying to establish fintech as a third growth driver.

Sea said Tuesday it’s acquired Composite Capital Management, a Hong Kong-licensed global investment management firm.

The company will deploy US$1bil toward Sea Capital, a newly established platform to manage its overall investments.

Composite Capital founder David Ma – a former partner at Chinese private equity giant Hillhouse – becomes Sea Capital’s chief investment officer, reporting to Sea chief executive officer Forrest Li.

“Sea’s growth prospects remain promising, riding on the growing digital economy in the region, ” Citigroup analysts led by Alicia Yap wrote. “Guidance could prove conservative.”

The pandemic is helping to spur demand at Sea’s e-commerce business Shopee, with fourth-quarter sales increasing 178% to US$842.2mil. Sea forecast 2021 revenue at Shopee of US$4.5bil to US$4.7bil, up from US$2.2bill in 2020.

Hit mobile game Free Fire is fuelling growth at Sea’s digital entertainment service Garena, whose sales last quarter rose 71.6% to US$693.4mil.

Sea forecast Garena’s annual bookings – sales plus changes in deferred revenue – will increase to US$4.3bil to US$4.5bil in 2021.

Its e-wallet service gained traction, with payment volume exceeding US$2.9bil for the quarter and US$7.8bil for the full year.

Sea is trying to build financial services into its third growth pillar.

Fourth-quarter sales and marketing expenses climbed 95% to US$665.2mil, led by digital financial services.

For 2020, Sea posted total digital entertainment bookings of US$3.2bil.

Annual revenue at Garena rose 77.5% to US$2bil.

Sea’s American depositary receipts ended mostly unchanged after surging as much as 11% Tuesday. — Bloomberg

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