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Sea Limited? More like Sea Unlimited

by Alan Daniel

Here is what you must know about Sea Limited and why it is an interesting company to a wide variety of people across the globe.

What is Sea Limited?

Sea Limited is a consumer internet company based in Singapore. It already has a valuation of upwards of 80 billion dollars, and it has only been around since 2009. It is also known as Garena, and has core operations in the game development and publisher industry. The firm creates and distributes games on its platform, Garena+ in emerging markets. One can find that it has strong presence in the Southeast Asian region. It is affiliated with MOBA titles such as LoL and other popular games.

A recent game it deployed, Garena Free Fire, has captured the interest of over 70 million daily active users. That’s right, over 70 million daily active users, that’s quite a feat. That’s astounding and it may provide some insight into why more individuals are gravitating toward the company as either investors or players.

But the question here is how much value is there in gaming and is that all that Sea Limited does at the present moment?

Well, that’s what Garnena thinks it can do. It thinks that it is more than gaming and other segments, so it re-organized under a new name, Sea Limited. Sea Limited has various subsidiaries that range from Garena, its gaming unit, to Shopee, it’s e-commerce unit.

So Garena is now Sea Limited and wants to do much more. How much can it grow?

Look at Size of the Markets Sea Limited Operates In

Growth companies are appealing if they have demonstrated a history of tremendous growth and then can show that they have a large market to still address over the next five years, ten, fifteen years. Sea Limited serves the South East Asian markets, and has the potential to branch out. These markets have large populations and are slowly becoming more digital. That coupled with emerging economies that provide more wealth over time, can lead to massive benefits for Sea Limited.

If you are looking at internet companies, you are seeing that firms like Softbank are seeking to invest all over the world. They are not only looking at United States firms but are looking at companies that are going to be key players in places that still have a lot of growing to do, like South East Asia, South Asia, and Latin America.

The United States has over 86% internet penetration, Latin America has over 70%, while Southeast Asia seems unclear, it is experiencing a boom as well. But the key point here is that Latin America and SouthEast Asia has much more room to run. At the same time, Latin America might have more GDP on average over SE Asia.

Sea Limited is in over five southeast Asian countries and is in Taiwan as well. It is essential to note that Taiwan, Thailand, and Vietnam are key countries for Sea Limited at the present moment. The firm collects over 70% of its revenues from these three countries.

Sea Limited Has More Banking Potential

It does not look like these countries are going to slow down anytime soon, especially if the current dynamics continue. That means that Sea Limited has further room to grow. You can expect more in the region to modernize and adopt mobile payments over time as well. Did you know that at the present moment, a large majority of transactions occur through cash?

Various entities and decentralized projects such as bitcoin and others are trying to bank the unbanked. They are either trying to bank them in a decentralized way or centralized with the present financial system. Sea Limited has a large opportunity to bank more individuals as Vietnam, the Philippines, and other countries in the region have low banking adoption rates.

But wait, there’s more. You can easily find that credit cards do not run rampant in these countries, and consumer debt (credit cards) have significant room to grow. Cash transactions also remain a large factor as noted above and the digitization of these transactions with a payment system from a provider like Sea Limited, that they already know, can make a difference.

Serves Various Demographics

The firm knows that it will limit itself if it only serves those with higher incomes. So that is why it ensures to slowly serve more across the income range. That broad coverage can help a firm as it seeks to become a high-growth entity.

What Are Its Core Divisions?

The core of Sea Limited is gaming, but it is also in E-commerce and gaming as well. Gaming seems to be a large opportunity for Sea Limited, as well as its Sea Money (banking and payment) division. These segments are diverse and present a sea of opportunity in a world that is shifting behaviors and going more digital.

But it is no surprise to see Sea Limited expand beyond South East Asia as it has started serving Garena games to certain countries in Latin America.

The other interesting point is that Tencent, another gaming and entertainment company, owns a stake in Sea Limited, around 20% as of 2017, among other firms.

 

 

 

 

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