Sea Limited, a prominent tech player in Southeast Asia, marked a significant milestone on Monday by announcing its first profitable year amidst fierce competition from rivals like Alibaba-owned Lazada and TikTok.
The company reported a net income of $162.7 million for 2023, a notable turnaround from the $1.7 billion net loss recorded in 2022. However, there was a dip in the fourth quarter of 2023, with a net loss of $111.6 million compared to a net income of $422.8 million in the same period of the previous year.
Forrest Li, Chairman and CEO of Sea, expressed satisfaction with the company’s achievements, stating, “In 2023, we achieved profitability, strengthened our market leadership for our e-commerce business, grew our digital financial services business, and stabilized the performance of our digital entertainment business.”
This profitability marks a significant shift for Sea, which had previously accumulated substantial losses since its establishment in 2009.
Operating primarily in Southeast Asian markets, Sea operates across diverse sectors, including e-commerce (Shopee), financial services (SeaMoney), and gaming (Garena).
Li highlighted the company’s strengthened financial position, with its cash reserves reaching $8.5 billion by the end of 2023, reflecting disciplined investment strategies.
The news of Sea’s profitability was well-received by investors, as evidenced by a 5.58% increase in Sea’s New York-listed shares on Monday. Looking ahead, Li expressed optimism, stating the firm anticipates 2024 to also be a profitable year.
Despite facing intensified competition in Southeast Asia, Sea’s e-commerce platform, Shopee, managed to gain significant market share in 2023.
The firm emphasized its commitment to maintaining this market share in 2024 despite challenges posed by competitors like Lazada and Tokopedia.
Notably, Tokopedia’s merger with TikTok Shop in Indonesia has garnered attention, with TikTok set to hold a controlling stake of 75.01% in the enlarged Tokopedia entity. This development underscores the evolving world of e-commerce in the region.
Sea’s financial arm, SeaMoney, also reported its first year of profit in 2023, while the company expects continued growth for its flagship game, Free Fire, in 2024.
Analysts have responded positively to Sea’s performance, with DBS Bank upgrading Sea from “hold” to “buy” and raising its target price to $75.
CGS-CIMB Securities and Wedbush also revised their ratings, reflecting optimism about Sea’s growth prospects and margin trajectory amidst easing competitive pressures.
