---
endpoint: analytics
pattern: Internet
status: done
latency_ms: 220896
conversation_id: df641e77-6f98-41e9-955e-de9a76948fea
citations: 0
created: 2026-05-31 19:48:17Z
---

# How does Sea Limited’s valuation compare to peers, and what justifies its premium/discount?

# Sea Limited (SE US) — Valuation vs Peers and the Premium/Discount Logic

CLSA's latest published view (14-May-2025, after 1Q25 results) anchors a sum-of-the-parts on Sea Limited with target price US$180, OUTPERFORM rating, vs share price US$154.13 / market cap US$91.2bn at the time of report. CLSA explicitly benchmarks each of the three businesses — Garena (gaming), Shopee (e-commerce), Monee (digital financial services, ex-DFS) — against a distinct peer set, with three different premium/discount conclusions.

## 1. The Sum-of-the-Parts: where SE's enterprise value comes from

| Segment | Method | 26CL Base (US$m) | Multiple (x) | Valuation (US$bn) | Per ADR (US$) |
|---|---|---|---|---|---|
| Garena | 26CL EV/adj EBITDA | 1,632 | **15.0** | 24.5 | 37.2 |
| Shopee | 26CL EV/adj EBITDA | 2,206 | **22.0** | 48.5 | 73.7 |
| Monee | 26CL EV/adj EBITDA | 1,314 | **25.0** | 32.9 | 49.9 |
| Net cash (end-25CL, CBs converted) | — | 11,950 | — | 11.9 | 18.1 |
| **Total** |  |  |  | **117.8** | **180** |

Source: CLSA SOTP table [1]. The May 14 framework raised every operating multiple vs the March 5 build (Garena 12x → 15x; Shopee 20x → 22x; Monee unchanged at 25x), lifting TP from US$146 to US$180 [1][9].

Note the structural break: CLSA migrated Garena from a P/E framework and Shopee/DFS from P/Sales to a uniform EV/adj EBITDA approach in March 2025 [12], reflecting that all three segments now generate positive adj EBITDA — a category change that itself drove most of the optical re-rating in the prior version of the SOTP.

## 2. Shopee — valued at a PREMIUM to global e-commerce peers (justified by growth)

CLSA's peer table (Figure 22, May 2025):

| Company | EV/2026 adj EBITDA (x) | Expected 2027 adj EBITDA YoY |
|---|---|---|
| JD.com | 4.8 | +6% |
| Pinduoduo | 5.2 | +19% |
| Alibaba | 9.0 | 0% |
| eBay | 10.2 | +7% |
| Amazon | 13.0 | +29% |
| MercadoLibre | 22.0 | +30% |
| **Shopee** | **19.5 (market) / 22.0 (TP)** | **+51%** |

Source: CLSA / Visible Alpha / Bloomberg [2]. Shopee trades at a meaningful premium to Chinese e-commerce (~5–9x), in line with MercadoLibre (~22x), and at a 50%+ premium to Amazon (~13x).

**CLSA's justification for the Shopee premium:**
- **Highest expected EBITDA growth in the peer group**: +51% expected 2027 adj EBITDA YoY, materially above MELI (+30%), Amazon (+29%), and 5–10x the Chinese platform peers [2].
- **Regression analysis**: 22x is "fair based on regression analysis of EV/EBITDA vs YoY EBITDA of global competitors and Shopee's higher growth outlook" [6].
- **Operational inflection**: 1Q25 Shopee delivered GMV +21% YoY, revenue +28% YoY, with a large EBITDA beat from AI-driven cost rationalization; management guides ~20% GMV growth and a long-term 2–3% EBITDA margin target [10]. Adj EBITDA estimates for FY25CL were lifted +60% vs prior forecasts [10].
- **Competitive moat**: TikTok Shop has not broken Shopee's position; Temu has struggled in Brazil; SPX (Shopee's logistics arm) has driven cost leadership [10][6].

The premium is rate-of-change driven, not absolute-quality driven — if Shopee's EBITDA-growth gap to MELI narrows, the multiple gap should compress.

## 3. Garena — valued IN LINE with gaming peers (discount RECENTLY removed)

CLSA's gaming peer table (Figure 23, May 2025):

| Company | EV/EBITDA FY26 (x) |
|---|---|
| Nintendo | 29 |
| Take-Two | 25 |
| Koei Tecmo | 21 |
| PearlAbyss | 18 |
| Capcom | 15 |
| Square Enix | 15 |
| Tencent | 15 |
| Bilibili | 15 |
| Netmarble / EA | 14 |
| NetEase | 10 |
| Bandai Namco | 9 |
| Ncsoft | 7 |
| Nexon | 6 |
| Embracer | 4 |
| Ubisoft | 3 |
| **Garena (CLSA TP basis)** | **15.0** |

Source: CLSA / Bloomberg [3]. Peer average ≈ 14.5x.

**CLSA's justification for moving Garena from 12x (discount) to 15x (in-line):**
- Until March 2025, Garena carried a c.20% discount to the peer average specifically because of **single-game concentration risk** in Free Fire [11][12].
- That discount was **explicitly removed** in May 2025: "Lifted prior discount from concentration risk in the single flagship game, Free Fire with the launch of new self-developed game Free City. Recent successful collaboration with the Naruto IP further highlights the potential longevity of Free Fire" [5].
- 1Q25 bookings +43% QoQ / +51% YoY, paying ratio rising, ARPPU improving — empirical evidence that the franchise risk has narrowed [10].

This is the single biggest delta in the re-rating: 3x multiple expansion on Garena added ~US$10/ADR by itself.

The historical comparison vs Chinese / Korean gaming peers (NetEase 10x, Tencent 15x, Ncsoft 7x, Nexon 6x) tells you Garena is being valued more like a mid-tier Japanese/Western developer than a Korean/Chinese mobile gaming peer, despite its mobile-first profile — a non-trivial assumption that depends on Free City and the Naruto collab continuing to land.

## 4. Monee (DFS) — valued at a PREMIUM to global fintech (Shopee-synergy justification)

CLSA's fintech peer table (Figure 23, May 2025):

| Company | 2026 EV/EBITDA (x) |
|---|---|
| Shopify (SHOP) | 54 |
| Toast (TOST) | 32 |
| Q2 Holdings (QTWO) | 28 |
| Adyen | 26 |
| Mastercard | 24 |
| Visa | 23 |
| Clearwater (CWAN) | 21 |
| Upstart (UPST) | 21 |
| Affirm (AFRM) | 18 |
| Bill.com / HealthEquity | 14 |
| SoFi | 13 |
| Wise / PayPal | 10 |
| Nubank / Block (XYZ) | 9 |
| **Monee (CLSA TP basis)** | **25.0** |

Source: CLSA [4]. Peer average ≈ 20.4x.

**CLSA's justification for the Monee premium:**
- 25x is "c20% above peers given strong synergy with Shopee and high growth potential" [3][6].
- Specifically: 28m+ active users (+50% YoY in 1Q25), gross loans US$5.8bn, NPL 1.1% (down from 1.2%), and structural tailwinds from ASEAN unbanked penetration [10 — narrative from 1Q25 review].
- Off-platform borrowers now c.50% of the loan book — i.e., Monee is migrating from a captive Shopee fintech to a standalone digital bank [the off-platform diversification was emphasized in CLSA's March 5 note as well].

The premium is defensible while Shopee growth funnels new users into the financial product stack at near-zero acquisition cost. If Shopee growth slowed, the synergy multiple would be the first to compress.

## 5. Putting it together — composition of the SE multiple

Sea Limited's blended EV/2026 adj EBITDA from CLSA's SOTP works out roughly:

- **Operating EV** (ex-cash) = US$117.8bn − US$11.9bn = **US$105.9bn**
- **Sum of 26CL segment adj EBITDA** (Garena 1,632 + Shopee 2,206 + Monee 1,314) = **US$5,152m**
- **Blended operating multiple ≈ 20.5x 26CL EV/adj EBITDA** [1]

This sits well above Chinese e-commerce (4.8–9x), in line with MELI / Amazon hybrid (13–22x), and above the gaming-only peers in aggregate. The premium is **earned on Shopee's growth and Monee's synergy** — not on Garena.

## 6. Where the premium is genuinely vulnerable

CLSA enumerates the risks that would compress the multiple [8]:
- **E-commerce slowdown** from weak consumer confidence — would directly attack the Shopee EBITDA-growth differential that supports the 22x.
- **TikTok Shop** continued share gain in ASEAN — same vector.
- **Online gaming visibility** — Garena's 15x is only defensible if the new game pipeline (Free City, Naruto, plus 2H25 Naruto follow-up) executes; otherwise the 20% concentration-risk discount comes back.
- **VIE / dual-class corporate structure** with foreign-ownership restrictions — a permanent governance discount that some buyside frameworks would apply, but CLSA's SOTP does not impose.

CLSA does not apply a holding-company conglomerate discount despite the three-segment structure — that is implicitly a vote of confidence that Shopee × Monee × Garena cross-sell is value-additive, not value-destructive.

## 7. Verdict on the premium/discount

| Segment | Stance vs Peers | Magnitude | Primary Justification |
|---|---|---|---|
| Shopee | **Premium** | ~+10% vs MELI, ~+70% vs Amazon, ~3–4x Chinese peers | Highest expected EBITDA growth in the global e-commerce peer set (+51% 2027 YoY) [2][6] |
| Garena | **In line** (was discounted) | At peer average (~14.5x) [5] | Concentration-risk discount lifted on Free City + Naruto IP success [5] |
| Monee | **Premium** | ~+20% to global fintech peer mean (~20.4x) [3][6] | Shopee ecosystem cross-sell + ASEAN unbanked growth runway |

The CLSA framework is **earnings-power and growth-rate driven**, not asset-value driven. The premium is justified for as long as (a) Shopee delivers 20%+ GMV growth with expanding EBITDA margin, (b) Garena's new-game pipeline replaces Free Fire's single-title risk, and (c) Monee's NPL stays sub-1.5% while user/loan growth holds ~20%. Any one of these slipping repaints a different SOTP — the March 5 build at US$146 was on essentially the same business but with 3x lower Garena multiple, 2x lower Shopee multiple, illustrating how sensitive the answer is to each of these three assumptions [9][11][12].

The corollary: SE bulls are paying for growth-rate persistence, not for a structural moat that justifies an absolute multiple. The biggest single risk to the multiple is not competition or macro — it is the assumption that Shopee's 50%+ 2027 EBITDA growth (the chart's #1 datapoint vs peers) holds [2].

---

**Sources**
[1] Sea Limited – O-PF (Firing on all cylinders) — CLSA (14 May 2025) — 607959388LinqAlpha.PDF — SOTP table, US$180 TP
[2] Sea Limited – O-PF (Firing on all cylinders) — CLSA (14 May 2025) — E-commerce peers EV/2026 adj EBITDA + growth
[3] Sea Limited – O-PF (Firing on all cylinders) — CLSA (14 May 2025) — Gaming peers EV/EBITDA FY26
[4] Sea Limited – O-PF (Firing on all cylinders) — CLSA (14 May 2025) — Fintech / payments peers 2026 EV/EBITDA
[5] Sea Limited – O-PF (Firing on all cylinders) — CLSA (14 May 2025) — Garena 15x rationale (discount removed)
[6] Sea Limited – O-PF (Firing on all cylinders) — CLSA (14 May 2025) — Shopee 22x / Monee 25x rationale
[7] Sea Limited – O-PF (Firing on all cylinders) — CLSA (14 May 2025) — Valuation details recap
[8] Sea Limited – O-PF (Firing on all cylinders) — CLSA (14 May 2025) — Investment risks
[9] Sea Limited – O-PF (Firing on all cylinders) — CLSA (14 May 2025) — Prior SOTP (US$146 build) for comparison
[10] Sea Limited – O-PF (Firing on all cylinders) — CLSA (14 May 2025) — Forecast revisions
[11] Sea Limited – O-PF (Digital dominance) — CLSA (5 Mar 2025) — Prior e-commerce peer comp
[12] Sea Limited – O-PF (Digital dominance) — CLSA (5 Mar 2025) — Prior valuation methodology (P/E + P/S framework)

