---
endpoint: analytics
pattern: Internet
status: done
latency_ms: 207524
conversation_id: fc8faef0-5346-4460-b132-65be6229cc40
citations: 0
created: 2026-05-31 18:17:42Z
---

# Is CLSA incrementally more positive/negative on Sea Limited. If so, why?

**Yes — CLSA is incrementally and progressively MORE positive on Sea Limited (SE US).** The rating has stayed at **Outperform (O-PF)** throughout, but the target price has been raised TWICE in the last six months, and the tone in each successive note has escalated from "running on track" to "firing on all cylinders." The latest CLSA note in scope is dated 14-May-2025.

## Target Price Trajectory — Two Upgrades Inside Six Months

| Note Date | Title | TP (US$) | Rating |
|---|---|---|---|
| 13-Nov-2024 | Sea Limited – Shopee in black | 120 | O-PF |
| 05-Mar-2025 | Sea Limited – Digital dominance | **146** (↑ from 120) [5][6] | O-PF |
| 10-Apr-2025 | Sea Limited – Hustle up for a grand heist (Free City) | 146 | O-PF |
| 23-Apr-2025 | Sea Limited – Keep a weather eye open (1Q25 preview) | 146 [9] | O-PF |
| 14-May-2025 | **Sea Limited – Firing on all cylinders (1Q25 results)** | **180** (↑ from 146) [1][2] | **O-PF** |

That's a **+50% cumulative TP uplift** in ~6 months (US$120 → US$180), implying ~+17% upside from the 13-May-2025 close [2]. The pattern — TP raised after each clean print plus a Garena catalyst — is the textbook profile of an analyst getting incrementally more confident, not just rolling forward valuations.

## What's Driving the Upgrade — Five Distinct Reasons

### 1. Shopee structurally beating on margins (not just revenue)
- **1Q25**: GMV +21% YoY (record-high) and revenue +28% YoY were "largely in line," but **EBITDA was +74% QoQ** as opex came in lower than expected. CLSA explicitly attributes the upside to **"improved cost structure from cost rationalisation and integration of AI tools that improves operational efficiency"** plus a benign competitive landscape [3].
- **4Q24**: Gross orders, AOV and take rate all up; CLSA said FY25 GMV guidance of "around 20%" is **achievable**, with **further upside to take rates** from sustained market rationalisation and higher ad revenue [7]. Consensus was modelling only +17% YoY [8].
- The valuation reset to a **20x EV/FY26 EBITDA multiple for Shopee** (in the SOTP that drove the move to US$146) reflects belief that Shopee's profitability is now durable, not cyclical [6].

### 2. Garena re-rated from a melting-ice-cube into a growth engine
- **1Q25 bookings +51% YoY / +43% QoQ**, with both user base and ARPU higher — driven by the **Free Fire × Naruto collaboration** [4].
- CLSA flagged Free Fire monthly downloads of **30m–37m in 1Q25, higher than the 22m pandemic-peak average** [10] — a remarkable second-life data point for a 9-year-old title.
- Pipeline reinforcement: **Garena Free City** (sandbox/heist game, "strong mobile substitute for GTA"), already at 1m+ downloads from its Argentina soft-launch, gearing up for global release in SEA/MEA — and potentially benefiting from GTA VI's console-only launch in low console-penetration markets [12].
- Net effect: CLSA now says "Recent and upcoming developments for Garena underline the strength of its development team and franchise, and **further reinforce its growth story**" — language meaningfully more bullish than the prior "running on track" framing [1].

### 3. Monee (formerly DFS) maturing into a real EBITDA contributor
- Management gave clearer color on the **cost structure of Shopee and Monee** at the 1Q25 print [1].
- At the CITICS-CLSA ASEAN Forum, investors were "**curious on the DFS business given its increasing contribution to group EBITDA**" — i.e., it's no longer a venture-stage line item but a swing factor for the group [Asean Forum highlights, 13-Mar-2025].

### 4. Macro/tariff defensiveness — a relative-positioning argument
- CLSA explicitly calls out Sea's **"limited exposure to the US and China"** in the April preview, arguing that this — plus Shopee's "intent-driven rather than impulse-purchase" shopping behaviour — should **dampen macro headwinds** [11].
- Garena game spending described as "a negligible proportion of discretionary income" and therefore "highly resilient against global macro uncertainties" [10].
- In a market where peers (PDD, BABA, ETSY) are being marked down for US-China tariff exposure, this is functionally a relative-rating call as much as a fundamental one.

### 5. Guidance credibility re-established
- 2025 guide of **~20% Shopee GMV growth and double-digit Garena bookings growth was ahead of consensus** at the 4Q24 print [8] — and 1Q25 then **reiterated** that guide with a beat on top of it [4]. That track-record reset has clearly driven the willingness to underwrite a higher multiple.

## What's Notably Absent (the negative-space check)

- **No rating change** — still O-PF, not Buy. CLSA's adj EBITDA forecasts at the March note were still **3-5% below Visible Alpha consensus** [6], suggesting they're not fully drinking the Kool-Aid on Street numbers.
- **FX risk acknowledged**: at the ASEAN Forum, management itself flagged "near term FX risk as well as the lower predictability of Garena's performance compared to its other business segments" — CLSA surfaced this rather than burying it [Asean Forum SUMMARY].
- **No Free City monetization in numbers yet** — CLSA is calling it a potential "meaningful contribution later in the year" [10], i.e., still optionality rather than baked into the TP.

## Bottom Line

CLSA's incremental positivity on Sea Limited is unambiguous, well-evidenced, and broad-based — driven by (i) Shopee margin re-rating from AI/cost rationalisation, (ii) Garena re-acceleration via Free Fire IP collaborations and a new self-developed game pipeline, (iii) Monee maturing into an EBITDA contributor, and (iv) defensive positioning versus US/China tariff exposure. The TP path **US$120 → US$146 → US$180** in two upgrades captures this progression cleanly. The headline thesis pivot is from "execution stabilising" (late 2024) to "firing on all cylinders" (May 2025) [1] — language and numbers both moving in the same direction.

---
**Sources**
[1] Sea Limited – O-PF (Firing on all cylinders) — CLSA (14-May-2025) — 607959388LinqAlpha.PDF
[2] Sea Limited – O-PF (Firing on all cylinders) — CLSA (14-May-2025) — TP table, US$180/+17% upside
[3] Sea Limited – O-PF (Firing on all cylinders) — CLSA (14-May-2025) — Shopee unit economics / AI
[4] Sea Limited – O-PF (Business update first thoughts, 1Q25) — CLSA (13-May-2025) — 607959308LinqAlpha.PDF
[5] Sea Limited – O-PF (Digital dominance) — CLSA (05-Mar-2025) — TP raised US$120 → US$146 — 607952319LinqAlpha.PDF
[6] Sea Limited – O-PF (Digital dominance) — CLSA (05-Mar-2025) — SOTP / multiple-by-segment
[7] Sea Limited – O-PF (Digital dominance) — CLSA (05-Mar-2025) — Shopee 4Q24 / FY25 take-rate upside
[8] Sea Limited (4Q24 business update first thoughts) — CLSA (04-Mar-2025) — 607952233LinqAlpha.PDF
[9] Sea Limited – O-PF (Keep a weather eye open) — CLSA (23-Apr-2025) — TP US$146 maintained — 607956682LinqAlpha.PDF
[10] Sea Limited – O-PF (Keep a weather eye open) — CLSA (23-Apr-2025) — Free Fire × Naruto / Free City
[11] Sea Limited – O-PF (Keep a weather eye open) — CLSA (23-Apr-2025) — Limited US/China exposure
[12] Sea Limited – O-PF (Hustle up for a grand heist) — CLSA (10-Apr-2025) — Garena Free City — 607955563LinqAlpha.PDF

