Shopee’s parent company under profit pressure

Game and e-commerce conglomerate Shopee is focusing on improving profitability after a staggering 2020 growth thanks to Covid-19.

Thanks to the trend of working from home due to Covid-19, Sea saw a positive growth. On March 2, the Singaporean company reported revenue of $ 4.37 billion in 2020, double that of 2019. However, the net loss hit $ 1.61 billion, higher than a year earlier (1.46 billion USD) because of strong spending to win market share.

Sea’s Shopee grew rapidly during the Covid-19 epidemic in the world, becoming the most visited e-commerce website in six countries, according to iPrice’s quarterly data. Along with that, Sea also increased the expansion of electronic payments in the region.

Sea e-commerce revenue increased about 160%, reaching 2.16 billion USD, but operating loss also increased 27%, to 1.44 billion USD. For the finance department, revenue was only 60 million USD, while the loss was 520 million USD. The gaming division contributed $ 2.01 billion in revenue, up 77% year-on-year, operating profit up 92%, reaching $ 1.01 billion thanks to the popular mobile game Free Fire.

In a phone meeting on the same day, CEO Sea Forrest Li said that 2020 is a milestone year for Sea. He said the company has successfully addressed the rapidly changing and rapidly evolving needs of its customers. He predicted e-commerce revenue this year to double, reaching between 4.5 to 4.7 billion USD.

As a rare Southeast Asian technology company listed on US stock exchanges, Sea attracted a lot of attention last year despite huge losses. Investors – who see potential in Southeast Asia’s technology industry – have come to Sea. Many believe Sea has the potential to become the Alibaba or Tencent of the region in the future.

In 2020, Sea shares rose more than 5 times, becoming the biggest gainer among public Asian companies. As of March 1, Sea is valued at $ 126 billion. By comparison, Sony and Uber have a market capitalization of $ 134 billion and $ 100 billion, respectively. However, over the past week, due to a number of factors in bond yields, Sea shares have fallen more than 10% from their peak on February 19.

Along with its business results, Sea announced the establishment of an investment company called Sea Capital, which will allocate about $ 1 billion to its new investments over the next few years. Sea Capital will focus on “identifying, cooperating and investing in technology firms with a common vision of creating a better life for users and small businesses through technology,” said Mr. Li.

At the same time, a goal for Sea in 2021 and beyond is to find a profitable path. Since listing in 2017, the company has not reported any profit.

Sea is paving the way to monetize the unprofitable businesses. According to a January report from DBS Group Holdings, by the end of the third quarter of 2020, Sea has increased fees for sellers on the e-commerce platform in some markets. For example, in Vietnam, fees increase from 3% to 5% depending on the item compared to the previous one was 1% to 2%.

As for finance, last year, Sea won a license to provide digital banking in Singapore. They also acquired a small Indonesian loan company, Bank BKE. This move could help the corporation bring in revenue.

However, improving profitability is not easy in a highly competitive market like Southeast Asia. Technology unicorns Gojek and Tokopedia are negotiating a merger, if successful, it will create a formidable technology corporation. The Grab super app is also an uneasy competitor in the financial sector. Grab is also licensed with digital banking in Singapore.

In an interview with Nikkei Asia in 2020, Mr. Li alleviated the aforementioned concerns by saying that the company does not want to damage its growth potential and can be profitable at any time simply by reducing further costs. market.

Du Lam (According to Nikkei)

The parent company Shopee makes investors look forward to the merger of Grab - Gojek

The parent company Shopee makes investors look forward to the merger of Grab – Gojek

As shares of Sea, Southeast Asia’s largest technology company, rose, investors at Grab and Gojek could only lick their lips.


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