Broker: UOB Kay Hian
Date of Report: Wednesday, 13 August 2025
Sea Limited Surges Ahead in 2Q25: Record Profits, Growth Momentum, and Upgraded Target Price
Introduction: Sea Limited Delivers Standout 2Q25 Results
Sea Limited (NYSE: SE), a Southeast Asian internet powerhouse, has delivered a stellar performance in the second quarter of 2025. The company, which operates across digital entertainment, e-commerce, and digital financial services, exceeded expectations with robust revenue growth, surging profits, and record operational metrics. UOB Kay Hian maintains its BUY recommendation, raising the target price to US\$204.85, representing a 40.1% upside from the current share price of US\$146.23.
Key Highlights at a Glance
- 2Q25 Revenue: US\$5,259 million (+38% year-over-year)
- 2Q25 Core Net Profit: US\$406 million (+396% year-over-year)
- 1H25 Revenue: US\$10.1 billion, accounting for 54% of full-year forecasts
- Adjusted EBITDA 1H25: US\$1,749 million (up 106% YoY)
- Gross Cash Position: US\$10.6 billion
- Operating Cash Flow 1H25: US\$2.4 billion
Stock Overview and Performance
- GICS Sector: Communication Services
- Market Cap: US\$86.6 billion
- 52-Week Price Range: US\$65.15 – US\$172.65
- Major Shareholders: Not specifically listed
- FY25 NAV/Share: US\$19.57
- FY25 Net Cash/Share: US\$9.49
Financial Performance Breakdown
| Year to 31 Dec (US\$m) |
2023 |
2024 |
2025F |
2026F |
2027F |
| Net Turnover |
13,064 |
16,820 |
19,846 |
23,768 |
26,963 |
| EBITDA |
225 |
662 |
2,663 |
3,540 |
4,256 |
| Operating Profit |
225 |
662 |
2,663 |
3,540 |
4,256 |
| Net Profit (Adj.) |
151 |
444 |
2,120 |
2,982 |
3,714 |
| EPS (US\$ cent) |
27.1 |
79.6 |
355.0 |
488.8 |
596.4 |
| PE (x) |
540.2 |
183.7 |
41.2 |
29.9 |
24.5 |
| P/B (x) |
12.3 |
9.7 |
7.5 |
6.1 |
4.9 |
| EV/EBITDA (x) |
360.5 |
122.4 |
30.4 |
22.9 |
19.0 |
| Net Margin (%) |
1.2 |
2.6 |
10.7 |
12.5 |
13.8 |
| ROE (%) |
2.4 |
5.9 |
21.1 |
22.6 |
22.4 |
E-Commerce: Shopee Sets New Records in 2Q25
- Order Volume: 3.3 billion orders (+32% YoY)
- GMV: US\$29.8 billion (+28% YoY)
- Revenue: +34% YoY
- Adjusted EBITDA: US\$228 million (vs. US\$9 million loss in 2Q24)
- Profitability: Improved across both Asia and Brazil
- Ad Take Rate: Up 70 basis points YoY
- Purchase Conversion: +8% YoY, driven by tech enhancements
- Brazil Highlights: Shopee now leads in order volume, expanded product range, and reduced delivery times by two days
Digital Financial Services: Monee’s Loan Book Almost Doubles
- Revenue: US\$883 million (+70% YoY)
- Adjusted EBITDA: US\$255 million (+55% YoY)
- Total Loan Book: US\$6.9 billion (+94% YoY)
- NPL Ratio: Stable at 1%
- New Borrowers: Over 4 million first-time borrowers added in the quarter
- Active Loan Users: Over 30 million (+45% YoY)
- SPayLater: Achieved record first-time borrowers in June
- Off-Shopee Products: Strong showing, with Malaysia portfolio up 40% quarter-on-quarter
Digital Entertainment: Free Fire Powers Bookings and Engagement
- Bookings: US\$661 million (+23% YoY)
- Revenue: US\$559 million (+28% YoY)
- Adjusted EBITDA: US\$368 million (+22% YoY)
- Quarterly Active Users: 664.8 million (+3% YoY)
- Quarterly Paying Users: 61.8 million (+18% YoY, 9.3% ratio)
- ARPPU: US\$0.99 (up from US\$0.83 in 2Q24)
- Free Fire Daily Active Users: Over 100 million
- New Content: 8th anniversary releases, Netflix’s Squid Game and Naruto Shippuden Chapter 2 collaborations performed strongly
2H25 Outlook: Upbeat Guidance and Growth Drivers
- GMV Growth: Likely to exceed 20% target, with 1H25 GMV up 25% YoY
- Ad Take Rate: Meaningful room for further expansion
- Tech Enhancements: Continue to lift purchase conversion rates
- VIP Membership: Gaining traction in Indonesia
- Instant Delivery: Being rolled out at minimal cost
- Brazil: Shopee logistics cost per order remains below competitors; high-value brands boost basket size
- Loan Book: Expected to grow faster than Shopee’s GMV, driven by cross-selling, tiered rates, and regional expansion
- Off-Shopee Expansion: Malaysia and Thailand portfolios growing via international QR network
- New Lending Partnerships: Early-stage partnerships with Brazilian lenders
- Digital Entertainment: 2025 bookings guidance raised to over 30% YoY growth, with Free Fire leading as an evergreen franchise and new genre/AI expansions
Earnings Revision and Risks
- Upward Revision: 2025-2027 net profit forecasts revised up by 42%, 62%, and 54% respectively, reflecting outperformance and guidance beats
Valuation and Recommendation
- BUY Rating Maintained: Target price raised 13% to US\$204.85 (previously US\$181.64)
- Valuation Method: SOTP (Sum-of-the-Parts) based
| Segment |
2026F Net Profit/Sales (US\$m) |
Valuation Method |
Multiple (x) |
Fair Value (US\$) |
| Digital Entertainment |
1,142 (net profit) |
0.6x average peers PE |
9.0 |
18.46 |
| E-Commerce |
16,570 (sales) |
1x average peers PS |
3.0 |
101.18 |
| Digital Financial Services |
1,988 (net profit) |
1x average peers PE |
20 |
71.39 |
| Net Cash |
7,700 (net cash) |
|
|
13.83 |
| Total |
204.85 |
Share Price Catalysts
- Release of new self-developed games
- Higher-than-expected market share and margin gains in core markets
Conclusion: Sea Limited’s Growth Story Accelerates
Sea Limited’s 2Q25 results showcase a company firing on all cylinders. Record e-commerce metrics, a rapidly growing loan book, and a reinvigorated digital entertainment arm underpin a robust upward earnings revision and a higher target price. With continued investment in technology, international expansion, and innovative financial products, Sea Limited is positioned for further outsized growth in the second half of 2025 and beyond.
Analyst Team
- John Cheong, Senior Analyst
- Heidi Mo, Analyst
