Sea有限公司：电子商务——定价纪律？

RatingOutperform Price Target SE 150.00 USD SEA Ltd: E-commerce —pricing discipline? The e-commerce market in Asean is consolidating, but competition between the top twoplatforms remains intense amid thin margins. Our mid-April price tracker suggests aninflection, with prices rising across the region, bringing margins into focus. What's driving thistrend? We discuss. We track a static basket of products across TikTok Shop and Sea Ltd in key ASEAN marketseach quarter, assessing price movements, relative competitiveness, and underlying driverssuch as changes in couponing and delivery charges. Our tracker indicated continuous pricedeclines over the past two years as both Sea and TikTok Shop continued to optimise forgrowth. This aggression while limiting margin expansion, has led to a consolidation with amulti-player market now redu:ing to a two-player one in most markets. The latest mid-April data, however, suggests a reversal, with broad-based price increasesacross both platforms. This is driven not only by higher list prices but also by reduceddiscounting. We believe this reflects rising cost pressures, partly linked to the Middle Eastconflict. While this should help stabilize margins, impact of higher pricing on orders needs tobe watched, although that’s more of an economic construct rather than a Sea specific one. With Sea already guiding for lower margins, expectations remain muted. Importantly, theabsence of disruptive competitive behavior suggests platforms retain pricing discipline.This will enable Sea to take calibrated actions in markets like Taiwan to protect longer-termpositioning. Our tracker indicates that external disruptions, including the MENA conflict,are leading to orderly price adjustments rather than intensifying competition creatingincremental margin risk. Investment Implications We believe that Sea Ltd is pricing in weak near-term margins for its e-commerce businessleading to low growth expectation, ensuring limited downside potential to the current stockprice. We maintain Outperform rating. DETAILS ECOMMERCE PRICING TRENDS Typically, every few months we track pricing for a fixed basket of products across ASEAN (ex-Singapore). Pricing has generallytrended down (see appendix for country-level trends). What stood out in our mid-April check, however, was a broad-based increase in prices across both Sea Ltd and TikTok Shop.While this could suggest easing competitive intensity and potential margin upside, we are cautious in interpretation given thepoint-in-time nature of the survey. Instead, we see this more as a reflection of rising costs—particularly fuel-linked to the MENAsituation, which is driving up logistics as well as merchant-level expenses. The key positive is that platforms appear to be passing on these costs rather than absorbing them, limiting incremental marginrisk. However, higher prices could weigh on order growth, especially if underlying demand softens. Pricing dynamics, measured by the share of products where Sea Ltd is cheaper than TikTok Shop in our sample, continue to shifteach quarter. In Indonesia, Sea lost ground to TikTok in the December quarter but has since regained it, with a higher share ofcheaper products in March. Across the rest of ASEAN, Sea appears more competitive in Vietnam and the Philippines, whereit is cheaper on a larger portion of the basket. Conversely, sharper price increases by Sea in Malaysia and Thailand have tiltedrelative pricing in favor of TikTok Shop in these markets. APPENDIX - FINANCIAL FORECASTS BERNSTEIN TICKER TABLE I. REQUIRED DISCLOSURES References to "Bernstein" or the “Firm” in these disclosures relate to the following entities: Bernstein Institutional Services LLC(April 1, 2024 onwards), Sanford C. Bernstein & Co., LLC (pre April 1, 2024), Bernstein Autonomous LLP, BSG France S.A. (April 1,2024 onwards), Sanford C. Bernstein (Hong Kong) Limited盛博香港有限公司,Sanford C. Bernstein (Canada) Limited, SanfordC. Bernstein (India) Private Limited (SEBI registration no. INH000006378), Sanford C. Bernstein (Singapore) Private Limited,Sanford C. Bernstein Japan KK(サンフォード・C・バーンスタイン株式会社)and analysts employed by Société GénéraleAfrica Technologies & Services to produce Bernstein research under a Global Services Agreement in place between Bernsteinand Société Générale. Bernstein is part of a joint venture between Société Générale (SG) and AllianceBernstein, L.P. (AB). Unless specifically notedotherwise, for purposes of these disclosures, references to Bernstein’s “affiliates” relate to both SG and AB and their respectiveaffiliates. VALUATION METHODOLOGY Sea Ltd We value Sea Ltd at a target price of $150 using DCF valuations (11.5% discount rate, 2% terminal growth and explicit forecastsuntil CY35). Revenue and EBITDA growth built in our DCF model from CY24-CY35E are10%/10% CAGR. RISKS Sea Ltd Sea Ltd has significant dependence on one game - FreeFire, hence a moderation in active user base as they move to other gamesis a key