The SEA Dragon

The neighbour I speak of is not Japan but rather Southeast Asia or “SEA”.

The SEA region is comprised of multiple countries which include the likes of Taiwan, Thailand, Vietnam, Singapore, the Philippines, Malaysia and the world’s fourth most populous country, Indonesia. What makes the SEA region quite intriguing is that it has given birth to a three-headed dragon that has grown in stature, so much so that it has come to challenge and in certain instances overthrow the Chinese dragons of Alibaba and Tencent. The dragon I speak of is the aptly named Sea Limited.

The first head of the dragon is called “Garena”, an online gaming platform. Garena specialises in localising games for the various SEA regions which would involve converting a game from companies such as Tencent or Activision Blizzard into the language of the country. Garena has also published its own game, Free Fire, which has been hugely successful and is not only the most popular game in the SEA region but also across Latin America (“LaTAM”), not to mention that it has become one of the most played and highest grossing games in the US. Garena is highly cash generative and it is the head that feeds the other two.

The second dragon’s head is "Shopee", an e-commerce platform. Shopee has quickly grown into the largest e-commerce platform in the SEA region, supplanting Lazada, an Alibaba subsidiary, to become the incumbent. This head is likely to become the biggest of them all as e-commerce penetration is still quite low in the region which provides a lot of runway for growth. The reach of this dragon’s head, much like its gaming counterpart, extends into the LaTAM region where it too is generating headwinds as it makes inroads into the burgeoning e-commerce space in the region.

The third head is very much in its infancy but has experienced significant growth nonetheless and that is SeaMoney, a fintech platform. SeaMoney offers a variety of services to consumers and merchants which integrate quite eloquently with its e-commerce platform. These services include mobile wallets, payment processing and credit (buy now pay later).

In as little as five years, Sea Limited's revenue has increased fifteenfold. Combined, the three heads form a “Super App” firm that has come to dominate the SEA region, along with a growing presence in LaTAM. This “Sea” monster is still experiencing a serious growth spurt and we look forward to seeing just how big it can become.

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About the Author

Jonathan Wernick
Global Equity Analyst, Sasfin Wealth

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