Brokers' take: Maybank KE lifts Sea TP to US$379 on higher revenue estimates
MAYBANK Kim Eng raised its target price for consumer Internet company Sea to US$379 from US$378, on better expectations for its e-commerce arm Shopee and mobile wallet SeaMoney.
In a report on Thursday (Nov 17), analyst Gene Lih Lai has a "buy" call on the stock, and said he continues to like Singapore-based Sea as a proxy to the adoption of e-commerce and digital finance in South-east Asia.
Shares of Sea closed at US$314.41 on Nov 17 on the New York Stock Exchange, down US$15.50 or 4.7 per cent.
Lai raised estimates for Sea's revenue by 9 per cent for FY2021, 11 per cent for FY2022 and 12 per cent for FY2023, to account for better-than-expected take rate for Shopee and SeaMoney, noting that the company's third quarter 2021 results were ahead of estimates.
This was slightly offset by lower margin assumptions for its gaming segment Garena, as Lai expects a sequential slowdown in the fourth quarter of FY2021, which could cap sentiment for the stock in the near term.
The analyst still remains optimistic on mobile game Free Fire's growth prospects though, especially as the game has maintained its top positions in South-east Asia, Latin America, India and the US in the third quarter of 2021.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Free Fire MAX, an enhanced version of the original game, will likely also become a key factor in allowing Garena to deepen community engagement and drive future revenue growth, he said.
Lai, however, widened net loss assumptions for Sea in FY2021 and FY2022 as well, as he expects Sea will put in more investments to grow Shopee.
He noted that Shopee is currently testing waters in Poland, Spain, France and India, while SeaMoney's new initiatives - buy now pay later, digital banking and insurtech - are still in the early stages.
READ MORE
- Sea's Q3 loss deepens to US$450.1m, revenue up 122%
- Shopee to enter France in aggressive international push
- Nanofilm and Sea: Tale of two tech stocks with diverging fortunes after results release
Copyright SPH Media. All rights reserved.
