Sea Ltd：电商之战持续但噪音正在消退

Sea Ltd: E-commerce battle continues, but the noise is fading How fierce is e-commerce competition in Southeast Asia? We present thoughts based on thelatest on-the-ground checks. Our proprietary pricing tracker, which follows a fixed basket of products across platforms,continues to point to an industry choosing discipline over disruption. March quarter, pricesrose broadly as merchants grappled with higher logistics costs. Importantly, both Shopee andTikTok Shop moved in the same direction. Rather than fighting for every order, they appearedincreasingly focused on protecting economics. Sea's subsequent margin improvement onlystrengthened that narrative. The latest three months tell a similar story. Prices are still rising across most markets, thoughthe source of inflation has shifted. Previously, higher prices came from increases in post-discount listing prices. Today, the lift is coming less from what sellers ask and more from whatplatforms give away. Vouchers are fading into the background, and consumers are paying alittle closer to sticker price. Yet the two are following different scripts. Shopee has kept headline prices largelyunchanged while quietly pulling back on coupon subsidies, allowing realised selling pricesto climb. TikTok Shop has also eased promotional intensity, but softer delivery charges haveabsorbed much of the impact, leaving consumer prices comparatively contained. This hasresulted in Shopee is appearing less often as the cheapest platform relative to TikTok Shop.But the gap is not wide and hence it does not represent any major change in competitiveintensity. While growth focus remains - we are seeing attempts to keep margins intact. Investment Implications Overall, with most pricing changes modest and still directionally upward, we continue to viewthe market backdrop as supportive of margin stability. Maintain Outperform DETAILS Price increases continued across ASEAN this quarter, although the drivers differed from those observed previously. Shopeekept listing prices broadly stable across markets, generally within a range of -5% to +5%, but sharply reduced coupondiscounts, resulting in higher final consumer prices. This approach should be margin accretive, even if it comes at the expenseof some headline growth. TikTok Shop took a different route. While it also reduced coupon discounts, the impact was largelyoffset by lower delivery charges paid by consumers, helping limit increases in final prices across several markets. Listingdiscounts meanwhile recovered after declining last quarter, potentially reflecting improving merchant confidence as concernsaround elevated fuel costs eased.These differing approaches translated into changes in relative competitiveness. The proportion of products priced cheaper on Shopee declined across all markets in our sample, reflecting the sharper increase in final prices on the platform. However, thisdoes not appear to signal a meaningful shift in competitive intensity. Last quarter, we highlighted the platforms' ability to passthrough higher costs, particularly fuel-related increases linked to the MENA situation. The latest data suggests a continuationof that trend, albeit through different mechanisms. After nearly two years of persistent price declines, Sea appears increasinglyfocused on balancing growth with margin improvement, while TikTok Shop remains more focused on protecting consumer valueby offsetting lower vouchering with reduced delivery charges. Despite the narrowing of its pricing advantage, Sea remains more competitively priced than TikTok Shop across most ASEANmarkets in our sample. Vietnam was the only exception, where a sharper cut in TikTok Shop prices allowed it to regain someground, although Sea remains more competitive overall. Across the rest of the region, higher price increases on Shopee shiftedrelative pricing modestly in TikTok Shop's favour, but Sea remains either the cheaper platform or broadly at parity in mostmarkets. Overall, the data points to rational pricing behaviour rather than any meaningful escalation in competition. ECOMMERCE MARGINS E-commerce margins at Sea Ltd have improved materially over the years, but have largely remained within a similar range overthe past few quarters (September to March). This plateau reflects a deliberate choice to prioritise growth, with investmentsaccelerating in logistics and customer acquisition. The key concern has been whether margins could deteriorate further,particularly if TikTok Shop adopts a more aggressive stance. However, both our view and market consensus are that marginsshould remain resilient despite ongoing investments. Recent price increases also suggest there may be scope for modestmargin expansion ahead. 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