Thread by @ruima

1/ Wow, just read the very extensive & thorough report on Sea $SE from @kgao1412 of DJY Research. Founded in 2009 by Chinese-born Singaporean Forrest Li, it is now trading at $115Bn market cap. 2020 revenues were $4.4Bn off of 3 segments, gaming, ecommerce and fintech.

@kgao1412 2/ Not gonna summarize the report here but I saw many parallels w its development and Chinese cos, which is only natural and probably accounts for part of Sea's success anyway. For example, starting off in gaming cafes is basically what first wave of Chinese gaming cos did.

@kgao1412 3/ Then using social tools to amass users and turning that into an advantage to partner with Tencent and get sweet titles to publish. Then acquiring titles to grow own IP. But gaming in severely underbanked region meant Sea had to find a solution for payments, cue AirPay.

@kgao1412 4/ Doesn't that remind you of the story of Shanda, who also had to deal with lack of payment infrastructure and lots of PC cafes, and built 400K points-of-sale? Yeah. AirPay (2014) preceded Shopee the ecommerce marketplace which came online in 2015. It's mostly 3rd party sales.

@kgao1412 5/ DJY makes argument that Sea has adopted Mercado Libre model, supplementing where it lacks with 1P goods but mostly trying to be a marketplace. In features, it seems inspired by Taobao and Pinduoduo and have a product mix closer to Taobao than JD. Lots of room to grow here.

@kgao1412 6/ It's also experimenting w new products like food delivery, future fintech products, cloud services etc. but there's substantial competition. Bc of its roots in gaming, it's been compared to Tencent the most, but while there's a lot of China tech "inspiration" going on, I think

@kgao1412 7/ the competitive environment is going to be even more dynamic, as everyone can see what has happened in China and they won't make the same strategic errors. For sure not if Hillhouse (an investor in Sea) can help it? And new acqui-hire David Ma, investment head, is an alum!

@kgao1412 8/ The full writeup with excel outputs and clearly laid out assumptions is here. Have a read and do sign up for the membership! BTW, @techbuzzchina Insiders get a discount, I'll include the code in this week's digest!

djyresearch.com/2021/05/05/sea…