Maybank Research Pte Ltd
Date of Report: September 10, 2025

Sea Ltd Fires on All Cylinders: Shopee Monetization, Garena Diversification, and Fintech Growth Power a Bullish Outlook

Executive Summary: Sea Ltd’s Growth Story Accelerates with Higher Monetization and Strong Execution

Sea Ltd (NYSE: SE), the Southeast Asian internet powerhouse, continues its transformation from a scale-centric disruptor to a high-quality monetization engine across e-commerce, gaming, and digital finance. Recent strategic moves—including higher Shopee commission rates, Garena’s robust content slate, and fintech expansion—are translating into upgraded earnings estimates and a raised price target of USD 238 (from USD 205), representing a 24% upside from current levels. The stock trades at attractive growth-adjusted multiples, with the company well positioned to capture further market share and profit growth.

Key Investment Highlights

• Shopee’s Second Seller Commission Hike in 12 Months—Higher take rates are being well absorbed, with minimal consumer and seller pushback.
• Garena Sheds ‘One-Trick Pony’ Narrative—Successful franchise collaborations and a diversified publishing pipeline reduce concentration risk.
• Fintech and BNPL Drive Future Monetization—Digital financial services remain under-monetized relative to global peers, offering significant upside.
• Valuation Remains Attractive—Despite strong growth, Sea trades at a 13–35% discount to global e-commerce peers on a growth-adjusted basis.

Shopee: Sustainable Monetization with Higher Take Rates

Shopee, Sea Ltd’s e-commerce engine, has implemented another round of seller commission increases across key ASEAN markets in the last 2–3 months, averaging 1–1.5 percentage points (ppt) by category and market. This follows a similar move within the past year, mirroring industry peers TikTok Shop and Lazada. The coordinated sector-wide fee hikes indicate a rationalization of competition and a maturing marketplace.
A recent ASEAN-wide survey revealed:

• Only 13% of consumers cut online spending in response to recent price and fee hikes.
• Most buyers still see online as cheaper than offline alternatives; many shifted spending to essential categories.
• About two-thirds of Shopee sellers are neutral or positive about commission increases, planning to pass on costs to buyers rather than absorb them.

Shopee’s higher take rates are expected to lift adjusted EBITDA/GMV by 0.1–0.2ppt for FY26–27, even under the assumption that most incremental receipts are redeployed to support traffic and merchant services.

Further upside potential exists from:

• Accelerated offline-to-online transition in the ASEAN region (e-commerce penetration was just 12.8% in 2024 versus 25–30% in China and South Korea).
• Deeper fintech monetization, especially via Buy Now Pay Later (BNPL) services, which offer higher take rates.

Garena: Beyond Free Fire—Diversification, Collaborations, and AI-Driven Efficiency

Garena, Sea Ltd’s digital entertainment arm, has long faced investor scrutiny over its reliance on the blockbuster Free Fire franchise—now in its eighth year. However, Garena has proven adept at keeping the franchise fresh and monetized through:

• Localized content tie-ins (e.g., a Sholay homage in India).
• High-profile collaborations (Netflix’s Squid Game, Naruto) that drive engagement and in-game spending.
• Frequent, market-specific events that keep user acquisition and monetization elevated.

Crucially, Garena is investing in a broader pipeline, with new titles like Free City (a GTA-style open-world sandbox) and Delta Force. Early results are promising, with the Naruto Shippuden Chapter 1 collaboration in 1Q25 driving >50% YoY bookings growth. The company is leveraging group profitability to reinvest in game development, while the adoption of AI tools is reducing costs and boosting content iteration speed and margins.

Management expects Garena to grow bookings at 6–8% in FY26–27, with a strong 31% estimated growth for FY25, and sees EBITDA expanding 15–25% over FY25–27.

Fintech: SeaMoney’s Upside from Payments and BNPL

Sea’s digital financial services (DFS) business, SeaMoney, is closely tied to Shopee’s e-commerce platform, providing payment, lending, and BNPL products. The segment remains under-monetized versus global peers, offering a long runway for higher take rates. Merchant or platform fees for BNPL typically command mid-single-digit percentages of sales, much higher than traditional e-commerce rates. SeaMoney is expected to deliver robust adjusted EBITDA and steady revenue growth through FY27.

Comparative Valuation: Sea Ltd vs. Global Peers

Sea Ltd’s business mix—spanning e-commerce, fintech, and gaming—makes direct peer comparisons complex. By adjusting for the gaming business, the stock trades at FY26 EV/sales of 2.9x and EV/EBITDA of 24.1x, broadly in line with global e-commerce peers. However, on a growth-adjusted basis, Sea trades at a 13–35% discount, highlighting significant latent upside.

Financial Projections and Key Metrics

Sea Ltd is forecasted to deliver robust growth across all business segments. Here are the headline financial projections:

Risks and Considerations

• Downside Risks: Weaker consumer spending in Southeast Asia, slower user growth, increased competition (notably from new entrants), and higher-than-expected credit costs at SeaMoney.
• Upside Catalysts: Faster-than-expected user growth, stronger topline from Shopee market share gains, and successful platform monetization.

ESG and Social Impact

Sea Ltd addresses environmental, social, and governance (ESG) factors with targeted initiatives:

• 46% of workforce and middle-to-senior management are women; over 50 nationalities are represented companywide.
• Shopee provides financial relief and online training for MSMEs, with over USD 35 million in COVID-19 Seller Support Packages distributed.
• SeaMoney’s growth is closely linked to regulatory compliance and supporting government financial inclusion agendas.

Broker Outlook: BUY Rating, Higher Price Target

Factoring in higher seller commissions, improved Shopee monetization, and Garena’s diversified growth, Maybank Research reiterates a BUY rating on Sea Ltd, raising the target price to USD 238. The stock’s strong execution, resilient platform economics, and discounted valuation make it a compelling opportunity for investors seeking exposure to the fast-growing ASEAN internet sector.

Conclusion: Sea Ltd—A Compelling Play on Digital ASEAN

With all business engines firing—Shopee’s monetization, Garena’s franchise strength and new games, and SeaMoney’s fintech runway—Sea Ltd is set for multi-year growth. Its ability to raise take rates with minimal pushback, diversify gaming revenues, and drive fintech adoption positions the company for continued outperformance. Investors seeking high-growth, platform-driven exposure in Southeast Asia should keep a close watch on Sea Ltd.