Johannes Salim, CFA

Equity Bottom-Up

<ul><li>Conference call indicates that, by raising its adjusted revenue guidance, management of <a href="https://www.smartkarma.com/entities/8509" target="_blank" data-smartkarma-citation="entities:8509:1">Sea Ltd (SE US)</a> is more bullish.</li><li>The reality check is that Shopee (SE's e-commerce arm) remains in the early stages of monetization despite a take-rate progress shown in 1Q18.</li><li>Moreover, we estimate US$500 mn cash burn rate for SE for 2018 as Shopee would burn cash at a (much) higher level.</li><li>At current share price, our SOTP implies US$710 mn valuation for Shopee.</li></ul>

Conference call indicates that, by raising its adjusted revenue guidance, management of Sea Ltd (SE US) is more bullish.The reality check is that Shopee (SE's e-commerce arm) remains in the early stages of monetization despite a take-rate progress shown in 1Q18.Moreover, we estimate US$500 mn cash burn rate for SE for 2018 as Shopee would burn cash at a (much) higher level.At current share price, our SOTP implies US$710 mn valuation for Shopee.

Sea Ltd: Shopee は好転しつつあるか?