4 March 2021 | 11:14PM HKT

Sea Ltd. (SE)

CL

Earnings Review: Upbeat guidance, strong growth; Buy (on CL)

Buy

SE 12m Price Target: $330.00 Price: $251.28 Upside: 31.3%

Piyush Mubayi
+852-2978-1677 | piyush.mubayi@gs.com
Goldman Sachs (Asia) L.L.C.

Sea Limited (SE) reported 4Q20 results, which were largely in-line Pang Vittayaamnuaykoon
+65-6889-2470 | pang.vit@gs.com
with our expectations (Sea Ltd. (SE): First Take: Strong 2021 Goldman Sachs (Singapore) Pte

outlook; CL-Buy) and guidance for FY21 was significantly above Irma Sgarz
+1(212)357-3770 | irma.sgarz@gs.com
street consensus. We remain optimistic that Sea can leverage its Goldman Sachs & Co. LLC

success in gaming as well as ecommerce to grab market share in

For the exclusive use of DANIEL.TU@VIPASSETASIA.COM

ecommerce in Latam (Brazil + Mexico GMV TAM of US$42bn in

2020) and with new categories, such as food delivery (ASEAN food Key Data __________________________________
delivery TAM of US$11.9bn in 2020), in ASEAN. On both fronts, Market cap: $150.6bn
Enterprise value: $146.6bn
given the competition, we expect limited disclosure. Last, we 3m ADTV: $888.9mn
Singapore
believe its newly founded Sea Capital could lead to new Asia Internet
M&A Rank: 3
opportunities in the medium to long term. Leases incl. in net debt & EV?: No
Asia ex. Japan Conviction List

Based on 4Q20 results, guidance and latest data, we a) raise GS Forecast ________________________________
12/20 12/21E 12/22E 12/23E
gaming billings by 8-9% as we factor in better than expected Revenue ($ mn) New 4,375.7 8,537.7 15,512.3 20,602.1
guidance, and raise segment EBITDA margins by 244-271bps to Revenue ($ mn) Old 4,303.6 8,548.6 14,929.3 19,863.5
EBITDA ($ mn) (1,123.1) (211.9) 3,034.8 5,051.7
factor in higher revenues from FreeFire, their self developed game. EPS ($) New (0.66) 1.30 6.26 9.24
EPS ($) Old (0.20) 1.18 6.17 9.40
b) e-commerce GMV is slightly higher but marketplace take-rate is P/E (X) NM NM 40.1 27.2
lowered, reflecting the trends in 4Q20. On balance, our 12-m P/B (X) 19.2 55.3 31.1 17.6

d40b35aa90794d15830bee6881dcb9ef
Dividend yield (%) 0.0 0.0 0.0 0.0
SOTP-based TP is revised upward by 10% to US$330, from US$300, CROCI (%) 27.0 31.6 189.4 108.0

on the improved outlook for Garena & Digital Finance segments.

12/20 3/21E 6/21E 9/21E
Maintain Buy (on CL) EPS ($) (0.31) 0.39 0.38 0.36

GS Factor Profile ____________________________

Growth

4Q20 Key Takeaways Financial Returns

E-commerce (Shopee) Multiple

n Positives: Total GMV grew 111%/28% yoy/qoq to US$11.9bn (vs Integrated

GSe/Visible Alpha Consensus Data of US$11.8bn/US$10.8bn).

Shopee non-GAAP revenue was US$962mn for 4Q20 (+38% Percentile 20th 40th 60th 80th 100th

qoq). The implied take rate (net of product revenues) is 6.4% SE relative to Asia ex. Japan Coverage
SE relative to Asia Internet
this quarter vs 6.0% in 3Q20; Negatives: GAAP sales &
marketing as % of GMV is 3.7%, which is above our expectation Source: Company data, Goldman Sachs Research estimates.
See disclosures for details.

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result,
investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this
report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC
certification and other important disclosures, see the Disclosure Appendix, or go to
www.gs.com/research/hedge.html. Analysts employed by non-US affiliates are not registered/qualified as research
analysts with FINRA in the U.S.
 Goldman Sachs Sea Ltd. (SE)

Sea Ltd. (SE) Income Statement ($ mn) __________________________________

Buy CL Rating since Nov 14, 2017 Total revenue
12/20
4,375.7
12/21E
8,537.7
12/22E
15,512.3
12/23E
20,602.1
Cost of goods sold (3,026.8) (5,521.9) (8,941.7) (11,855.2)
SG&A (1,830.9) (2,726.8) (2,722.7) (2,636.2)
Ratios & Valuation _______________________________________ R&D (353.8) (414.7) (564.7) (721.0)
12/20 12/21E 12/22E 12/23E Other operating inc./(exp.) (467.6) (338.8) (575.3) (744.4)
P/E (X) NM NM 40.1 27.2 EBITDA (1,123.1) (211.9) 3,034.8 5,051.7
P/B (X) 19.2 55.3 31.1 17.6 Depreciation & amortization (180.2) (252.5) (326.9) (406.4)
FCF yield (%) 0.5 (2.0) (1.6) 0.4 EBIT (1,303.3) (464.4) 2,707.9 4,645.4
EV/EBITDAR (X) 540.5 118.9 32.0 21.6 Net interest inc./(exp.) (123.4) (115.3) (131.3) (144.1)
EV/EBITDA (excl. leases) (X) 540.5 118.9 32.0 21.6 Income/(loss) from associates -- -- -- --
CROCI (%) 27.0 31.6 189.4 108.0 Pre-tax profit (1,483.2) (579.7) 2,576.6 4,501.3
ROE (%) (71.2) (21.7) 56.3 55.6 Provision for taxes (141.6) (87.0) (438.0) (765.2)
Net debt/equity (%) (205.4) (146.2) (33.5) (26.6) Minority interest 6.8 3.2 (7.3) (13.3)
Net debt/equity (excl. leases) (%) (205.4) (146.2) (33.5) (26.6) Preferred dividends -- -- -- --
Interest cover (X) (8.8) (3.1) 18.3 31.3 Net inc. (pre-exceptionals) (1,618.1) (663.4) 2,131.3 3,722.7
Days inventory outst, sales 3.8 3.4 3.3 3.7 Post-tax exceptionals -- -- -- --
Receivable days 22.9 19.1 17.5 19.6 Net inc. (post-exceptionals) (1,618.1) (663.4) 2,131.3 3,722.7
Days payable outstanding 11.5 9.0 7.4 7.3 EPS (basic, pre-except) ($) (2.70) (1.11) 3.56 6.21
DuPont ROE (%) (47.3) (24.0) 43.7 43.3 EPS (diluted, pre-except) ($) (2.70) (1.11) 3.56 6.21
Turnover (X) 0.4 0.8 1.0 0.9 EPS (basic, post-except) ($) (2.70) (1.11) 3.56 6.21
Leverage (X) 3.1 4.1 3.3 2.6 EPS (diluted, post-except) ($) (2.70) (1.11) 3.56 6.21
Gross cash invested (ex cash) ($) (1,786.5) (184.4) 2,885.9 4,954.9 DPS ($) -- -- -- --
Average capital employed ($) (2,992.7) (2,439.8) 986.4 4,776.0 Div. payout ratio (%) 0.0 0.0 0.0 0.0
BVPS ($) 5.64 4.54 8.08 14.27
Balance Sheet ($ mn) _____________________________________
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Growth & Margins (%) ____________________________________ 12/20 12/21E 12/22E 12/23E

12/20 12/21E 12/22E 12/23E Cash & cash equivalents 7,026.1 4,032.3 1,634.6 2,283.6
Total revenue growth 101.1 95.1 81.7 32.8 Accounts receivable 363.0 531.2 955.6 1,256.4
EBITDA growth (45.9) 81.1 NM 66.5 Inventory 64.2 96.3 182.1 234.3
EPS growth 58.4 297.7 381.9 47.6 Other current assets 1,485.7 4,155.4 8,801.5 12,559.8
DPS growth NM NM NM NM Total current assets 8,939.0 8,815.2 11,573.8 16,334.1
EBIT margin (29.8) (5.4) 17.5 22.5 Net PP&E 386.4 406.7 379.9 303.7
EBITDA margin (25.7) (2.5) 19.6 24.5 Net intangibles 39.8 64.5 89.3 114.0
Net income margin (37.0) (7.8) 13.7 18.1 Total investments 0.0 0.0 0.0 0.0
Other long-term assets 1,090.5 2,073.1 3,849.8 5,246.3
Price Performance _______________________________________ Total assets 10,455.7 11,359.5 15,892.8 21,998.1
SE ($) S&P 500 Accounts payable 121.6 149.9 211.0 260.4
Short-term debt 0.0 0.0 0.0 0.0
500 4,500
Short-term lease liabilities -- -- -- --
400 4,000 Other current liabilities 4,514.4 6,051.7 8,401.3 10,749.3
Total current liabilities 4,636.1 6,201.6 8,612.3 11,009.6
300 3,500
Long-term debt 0.0 0.0 0.0 0.0
200 3,000 Long-term lease liabilities -- -- -- --
100 2,500 Other long-term liabilities 2,399.4 2,399.4 2,399.4 2,399.4
Total long-term liabilities 2,399.4 2,399.4 2,399.4 2,399.4
0 2,000 Total liabilities 7,035.4 8,601.0 11,011.7 13,409.0

d40b35aa90794d15830bee6881dcb9ef
Preferred shares -- -- -- --
Apr-20 Jul-20 Oct-20 Jan-21
Total common equity 3,382.9 2,721.3 4,843.8 8,551.8
3m 6m 12m Minority interest 37.3 37.3 37.3 37.3
Absolute 36.9% 70.3% 413.3% Total liabilities & equity 10,455.7 11,359.5 15,892.8 21,998.1
Rel. to the S&P 500 31.4% 54.0% 303.6% Net debt, adjusted (7,026.1) (4,032.3) (1,634.6) (2,283.6)
Source: FactSet. Price as of 3 Mar 2021 close.
Cash Flow ($ mn) ________________________________________
12/20 12/21E 12/22E 12/23E
Net income (1,618.1) (663.4) 2,131.3 3,722.7
D&A add-back 180.2 252.5 326.9 406.4
Minority interest add-back 6.1 2.5 (8.0) (14.0)
Net (inc)/dec working capital 1,021.8 (2,287.0) (4,522.2) (3,110.6)
Other operating cash flow 965.7 (0.7) (0.7) (0.7)
Cash flow from operations 555.9 (2,696.2) (2,072.8) 1,003.8

Capital expenditures (248.0) (272.8) (300.1) (330.1)

Acquisitions (24.8) (24.8) (24.8) (24.8)
Divestitures -- -- -- --
Others (614.1) -- -- --
Cash flow from investing (886.9) (297.6) (324.9) (354.9)

Repayment of lease liabilities -- -- -- --

Dividends paid (common & pref) -- -- -- --
Inc/(dec) in debt 1,150.0 -- -- --
Other financing cash flows 2,663.9 0.0 0.0 0.0
Cash flow from financing 3,813.9 0.0 0.0 0.0
Total cash flow 3,482.8 (2,993.8) (2,397.6) 648.9
Free cash flow 307.8 (2,969.0) (2,372.9) 673.7

Source: Company data, Goldman Sachs Research estimates.

4 March 2021 2
 Goldman Sachs Sea Ltd. (SE)

of 3.1%, hence adj. EBITDA loss of US$428mn came in above GSE of US$360mn.
n Management comments:
o Expansion into new segment and geography: Management remains
reluctant to give away details regarding their expansion in LatAm and entry
into the food delivery business in Indonesia though they see food-delivery
business as a category offering additional value-added to its users.
§ For LatAm ecommerce, while maintaining that it’s very preliminary,
management is encouraged by the traction so far and is optimistic that
the opportunity could be on par with the ASEAN markets. Based on
estimates of our Brazil consumer/internet analyst, Irma Sgarz, Brazil and
Mexico’s ecommerce market size is US$42bn in 2020 and will grow to
US$79bn by 2024.
§ MELI (covered by Irma) is market leader with 32% market share in
Brazil and c.25% share in Mexico. MELI is strong in 1) its breadth and
depth of assortment 2) logistics capabilities (free shipping policies &
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shipping solutions across in-house cross-docking, fulfillment and

external drop-shipping) and 3) payments (payment processing and
financing options for merchants and consumers).
§ However, MELI is currently charging relatively high take rates (albeit in
line with most large competitors), so small and less structured vendors
that work with a relatively tight P&L could potentially be attracted by
other platforms coming in with aggressive low take-rates (which seems
to be Shopee’s approach - Shopee currently charges 5% for local BZ
sellers). MELI also has no fresh grocery or restaurant delivery business
yet.
§ MELI’s customer acquisition and moat is built through its ecommerce
and payments offering, and MELI, as well as other Brazilian ecommerce

d40b35aa90794d15830bee6881dcb9ef
companies, is relatively early stage in social ecommerce (mostly limited
to Live shopping events). Shopee may look to leverage the success that
it has had on the gaming side in both Brazil and Mexico to lower CAC
for its ecommerce business. Hence, we believe that Shopee may try to
tackle the LatAm market from a lower-end segment through mostly
unbranded, easy to ship and lower value items to avoid frontal
competition with the market’s existing players.
§ For food delivery, Momentum Works estimates that Southeast Asia
total food delivery GMV is US$11.9bn in 2020 with Indonesia leading
the contribution of US$3.7bn. Sea limited is not new to the market as
it’s currently a market leader in Vietnam through its entity called Now.
However, Sea is now looking to enter into the more competitive,
Indonesian market.
o Shopee is the top ranking e-commerce platform by MAU, total time spent
in app on Android and downloads. In Indonesia, Shopee averages 4.7mn
orders per day, an 27% qoq improvement.

4 March 2021 3
 Goldman Sachs Sea Ltd. (SE)

o Marketplace take rates reach new highs at 6.40%. As per management, the
increase in the take rate has been across markets, driven by high-margin
revenue streams e.g. advertisement, transaction-based fees. Shopee has also
benefited from favorable GMV mix change, to more B2C/cross border.
o Sales and marketing as % of GMV increased qoq to 3.7% from 3.3%, with
cash burn per order largely flat qoq. Fourth quarter is seasonally a competitive
quarter as the platforms attempt to capture buyers during shopping seasons.
Shopee lowered the minimum basket size in 4Q20 to incentivize people to
make more purchases and noted that shipping subsidies are increasingly
subsidized by sellers (through FSS program) and 3PL logistics rebate. Sea
group other operating income, due to rebates from e-commerce related
logistics services provided by 3PL, increased to US$72.7mn in 4Q20 from
US$59.0mn / 6.0mn in 3Q20/4Q19.
o FY21 guidance suggests a strong year ahead; GAAP revenue is
US$4.5-4.7bn which translates to 108-117% yoy growth, 5% ahead of Visible
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Alpha Consensus Data of US$4.4bn. We forecast Shopee will grow GMV at

65% yoy, while the market place take rate rises to 7.25% from 5.4% in 2020.
n Our View: Strong GMV and take rate trends suggest further market share gains and
improving quality of GMV mix in 4Q20. EBITDA loss was however larger than
expected, mainly because Shopee continues to target market share wins and
maintain sales and marketing (as a ratio over GMV).

Exhibit 1: Ecommerce penetration in apparel still in low teens Exhibit 2: Brazil and Mexico ecommerce market size
while beauty and personal care still in low single digit

E-commerce penetration by category - BR E-commerce market size (US$ bn)

90
33.7%
80

24.2% 70
27
18.7% 60

d40b35aa90794d15830bee6881dcb9ef
17.3% 17.8% 25
50 22
10.3% 10.8%
40 19
5.3% 6.4% 14
3.8% 3.9%
1.9% 30 10 53
46
20 39
Electronics Non-Sportswear Sportswear Beauty and Personal 28 32
10 23
apparel and Care
Footwear 0
2019 2020 2021E 2022E 2023E 2024E
2019 2020 2024E
Brazil Mexico

Source: Goldman Sachs Global Investment Research Source: Goldman Sachs Global Investment Research

4 March 2021 4
 Goldman Sachs Sea Ltd. (SE)

Exhibit 3: Shopee Download

Shopee Download ('mn)

5,000

4,500

4,000

3,500 Other
BR
3,000
SG
2,500 TW
PH
2,000
MY
1,500 TH
VN
1,000
ID
500

0
1-Jan-19

1-Jan-20

1-Jan-21
1-Dec-18

1-Aug-19

1-Dec-19

1-Aug-20

1-Dec-20
1-Mar-19

1-Jun-19

1-Mar-20

1-Jun-20
1-May-19

1-Jul-19

1-May-20

1-Jul-20
1-Apr-19

1-Sep-19
1-Oct-19

1-Sep-20
1-Oct-20
1-Feb-19

1-Nov-19

1-Apr-20
1-Feb-20

1-Nov-20

1-Feb-21
For the exclusive use of DANIEL.TU@VIPASSETASIA.COM

Source: SensorTower

Gaming (Garena)
n Positives: Bookings were US$1.0bn, +111% yoy/+7% qoq, driven by strong QAUs
(+72%/+7% yoy/qoq) of 611mn along with expansion of pay ratio (+257 / + 56 bps
yoy/qoq). EBITDA margins beat our expectation at 65.5% vs GSe of 60.6%.
n Negatives: QARPPU decreased slightly qoq to US$13.9 vs US$14.5/14.4 for
3Q20/4Q19.
n Management comments and updates:
o Free Fire: Stayed as the top grossing game in LATAM/ASEAN in the quarter

d40b35aa90794d15830bee6881dcb9ef
and is the most downloaded mobile game globally in 2020. Free Fire is now
also the highest grossing mobile game in India for 4Q20 and FY20 as well.
Management expects user growth will continue around the region as Free
Fire has emerged as a global franchise, now the #1 grossing US mobile game
on playstore. In several large markets where traction has been strong, such as
Indonesia and India, user penetration remains relatively low.
o New games: Management mentioned that Garena has been testing many
ideas and prototypes and will continue to also diversify its pipeline to include
new genre. For its development capability, they believe they are in a good
position to attract talent from all over the world.
o EBITDA Margins: Garena reported a strong margin of 65.5% which
management attributed to Free Fire (self developed game so they don’t have
royalty fees) taking larger share of revenues. However, in the longer run,
management said we will see more diversification of revenue from both
self-developed and publishing games.
o 2021 guidance: Management alluded to another strong year of growth for

4 March 2021 5
 Goldman Sachs Sea Ltd. (SE)

Garena. The guidance is largely based on current games (eg. Free Fire, AOV)
growth and also games in pipeline (eg. Dauntless). Garena’s guidance
currently presents upside risks to street; +2-7% above Visible Alpha
Consensus Data. We also note that Sea group has traditionally provided very
conservative guidance where actual results came in 35% to 60% ahead of
guidance in the last 2 years.
n Our view: Revenues is largely in-line but Garena beat significantly on margins. We
raised Garena FY21E revenue by 8% based on trends of key games remaining
strong and together with upbeat guidance

Exhibit 4: Download has been stable Exhibit 5: ...while revenue reached new high again

Free Fire Download ('mn) Free Fire Gross Revenue (US$ mn)
9 $25
8
7 $20
6
$15
5
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4
$10
3
2 $5
1
0 $0
Apr-20
Apr-20

Sep-20
Sep-20
Dec-19

Mar-20

Aug-20
Aug-20
Jan-20
Jan-20

Feb-20
Mar-20

Jan-21

Apr-20
Apr-20

Sep-20
Sep-20
Feb-20

May-20
May-20

Nov-20

Nov-20

Feb-21

Feb-20
Feb-20
Jul-20
Jul-20

Nov-20

Dec-20
Dec-20

Jan-21
Feb-21

Jan-20
Jan-20

Aug-20
Aug-20

Nov-20
Nov-20
Nov-20

Feb-21
Feb-21
Jun-20
Jun-20
Jun-20

Oct-20

Dec-20
Jan-21
Oct-20

Dec-19

Mar-20
Mar-20

Jun-20

Dec-20

Jan-21
Jun-20
Jun-20

Oct-20
Oct-20
May-20

Jul-20
Jul-20
May-20
SEA+T Others SEA+T Others

Source: SensorTower Source: SensorTower

Digital Financial Services (SeaMoney)

SeaMoney reported a revenue of US$61mn, a 5.5X increase from US$11mn in FY20. Its
mobile wallet TPV exceeded US$7.8bn for FY20 with quarterly paying users surpassing
23.2mn. Sea also started disclosing its Loans receivable of US$403mn for 2020.
Management stated that they adopt a very long run view towards building this segment

d40b35aa90794d15830bee6881dcb9ef
and will focus on growing the underlying foundation of the digital financial business.
After that, they will continue to roll out other ancillary services such as lending, wealth
management or insurance. Management believes that opportunity in SeaMoney is
bigger than at Shopee itself. ShopeePay is already the no.1 player in Indonesia and
management also mentioned that they are within top 2 in many markets.

Sea also founded Sea Capital after acquiring 100% of Composite Capital, investment
fund founded by David Ma. They believe that it is important for a global internet
company to have this capability eg. Tencent. SeaCapital will look at opportunities
globally. We believe that this will help Sea group solidify its long term growth potential.

What to do with the stock

Based on 4Q20 results, guidance and latest data, we made changes to our FY21-23E
forecast details in Exhibit 8. We raised gaming bookings by 8-9% to factor in better than
expected guidance and raised its EBITDA margins by 244-271bps to factor in better than
expected margins. For e-commerce segment, we make small changes to GMV but
lower its marketplace take-rate given the miss in 4Q20. Reflecting our estimate

4 March 2021 6
 Goldman Sachs Sea Ltd. (SE)

changes, we also raise our 12-m SOTP-based TP (Exhibit 6) to US$330, from US$300
prior. We changed DFS base year to FY25E from FY22E prior to factor in its long term
strategy.

Maintain Buy (on Conviction List) as we view Sea as a key winner in the fast-growing
ASEAN/Taiwan gaming, ecommerce and payments markets, and see upside from its
successful moves into LATAM and India. Indeed, we see the company transforming into
a global EM internet play, competing in a much larger TAM.

Sea’s competitive advantages: 1) Leadership position in ecommerce, while gaining

momentum in B2C/cross-border, leveraging the highest number of active users; 2)
Strong content/games IP support from key shareholder Tencent (25.6%). As a
Singapore-based company, Sea remains Tencent’s gateway to ASEAN/Taiwan, and
potentially other emerging markets; 3) Increasing games development capabilities,
through its own studio (500+ developers) and/or from acquiring other studios, and
strong eSports and community management skills; 4) a payments business
well-integrated with ecommerce, leveraging its success.
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Key risks: 1) Competition from global peers; 2) macroeconomic and geopolitical risks
and exchange rate volatility; 3) execution in new markets e.g. LATAM/India; 4) inability
to derive synergies from all three businesses.

Exhibit 6: Sea SOTP summary

Implied PE (x)

Value Valuation
per share % of NAV 2022E 2023E Rev. CAGR, 21-23E
(US$ mn) Method
Gaming 65,016 108 32.9% 25.1 22.0 27% Segment DCF
E-Commerce 90,076 150 45.6% 54.9 28.8 90% Segment DCF
Fintech/Payments 26,440 44 13.4% N/A N/A 187% 15X 2025E EV/Sales, discount back to 2022E
New Initiatives 12,952 22 6.6% N/A N/A N/A 15X 2025E EV/Sales, discount back to 2022E

Core 194,483 324 98.4% 51.8 35.1 63%

Sea Capital 1,000 2 0.5% N/A N/A N/A Initial outlay
Net cash 2,173 4 1.1% N/A 2021E net cash

Total SOTP 197,656 330 100.0% 52.7 35.7 63%

d40b35aa90794d15830bee6881dcb9ef
Total # of shares (mn) 599 FDS

Note: TP is on a 12-month basis.

Source: Goldman Sachs Global Investment Research

4 March 2021 7
 Goldman Sachs Sea Ltd. (SE)

Exhibit 7: Gaming and Ecommerce DCF summary

Gaming 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E
Year 0 1 2 3 4 5 6 7 8 9 10
Revenue (gross) 4,435 5,147 5,940 6,819 7,788 8,512 9,141 9,688 10,165 10,584 10,956
yoy 39.2% 16.1% 15.4% 14.8% 14.2% 9.3% 7.4% 6.0% 4.9% 4.1% 3.5%
EBIT*(1-t) 2,267 2,590 2,960 3,369 3,809 4,184 4,516 4,811 5,073 5,308 5,522
Change in working capital 900 1,056 1,200 1,328 1,475 1,582 1,694 1,769 1,806 1,848 1,877
% of revenue 20% 21% 20% 19% 19% 19% 19% 18% 18% 17% 17%
D&A add-back 33 37 42 47 52 55 58 60 61 62 63
Capex 0 0 0 0 0 0 0 0 0 0 0
FCF 3,201 3,682 4,202 4,743 5,336 5,822 6,269 6,639 6,939 7,218 7,461
FCF/revenue 72% 72% 71% 70% 69% 68% 69% 69% 68% 68% 68%
PV (2022 base year) 3,201 3,288 3,350 3,376 3,391 3,303 3,176 3,003 2,803 2,603 2,402
Terminal value 106,592
PV of terminal value 34,320

Gaming Value 65,016

Ecommerce 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E
Year 0 1 2 3 4 5 6 7 8 9 10
GMV 62,897 100,333 132,680 156,922 178,690 203,651 229,024 255,533 281,799 310,323 337,060
Take rate 9.1% 12.3% 12.7% 13.2% 13.7% 14.2% 14.7% 15.2% 15.2% 15.2% 15.2%
Revenue 5,727 12,291 16,900 20,753 24,503 28,918 33,638 38,777 42,763 47,092 51,149
EBIT*(1-t) (1,018) 1,640 3,132 4,078 5,070 6,434 7,687 8,868 9,780 10,770 11,697
Change in working capital 135 368 347 245 218 249 437 530 398 426 408
% of revenue 2.4% 3.0% 2.1% 1.2% 0.9% 0.9% 1.3% 1.4% 0.9% 0.9% 0.8%
D&A add-back 176 216 256 364 376 399 465 536 591 650 706
Capex (298) (325) (355) (388) (424) (464) (508) (605) (663) (727) (797)
FCF (1,004) 1,898 3,380 4,299 5,240 6,618 8,081 9,329 10,106 11,120 12,016
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FCF/revenue -18% 15% 20% 21% 21% 23% 24% 24% 24% 24% 23%
PV (2022 base year) (1,004) 1,695 2,694 3,060 3,330 3,755 4,094 4,220 4,081 4,010 3,869
Terminal value 171,652
PV of terminal value 55,267
Ecommerce Value 90,076

Source: Goldman Sachs Global Investment Research

Exhibit 8: SE estimates change summary

New Old New vs Old
Sea Ltd 2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E

Group
GAAP Revenue 8,538 15,512 20,602 8,549 14,929 19,863 0% 4% 4%
Adjusted EBITDA 1,233 4,649 6,854 1,086 4,201 6,344 14% 11% 8%
Net Income (663) 2,131 3,723 (615) 1,979 3,601 N/M 8% 3%
Gaming
GAAP Revenue 3,105 3,603 4,158 2,886 3,333 3,812 8% 8% 9%
Bookings 4,435 5,147 5,940 4,122 4,761 5,445 8% 8% 9%
Adjusted EBITDA 2,765 3,157 3,608 2,469 2,798 3,160 12% 13% 14%

d40b35aa90794d15830bee6881dcb9ef
EBITDA Margins 62.3% 61.3% 60.7% 60% 59% 58% 244bps 256bps 271bps
QAUs 625.5 697.4 773.6 589.5 657.3 729.1 6% 6% 6%
Pay Ratio 12.3% 12.5% 12.8% 11.7% 12.0% 12.3% 55bps 50bps 50bps
ARPPU 14.5 14.8 15.1 14.9 15.1 15.2 -3% -2% -1%
Ecommerce
GAAP Revenue 4,972 10,886 14,777 5,261 10,783 14,637 -5% 1% 1%
GAAP Revenue + sales incentive 5,727 12,291 16,900 6,008 12,174 16,740 -5% 1% 1%
Adjusted EBITDA (1,050) 2,191 4,029 (736) 2,165 3,986 -43% 1% 1%
Total GMV 62,897 100,333 132,680 62,300 99,381 131,420 1% 1% 1%
Marketplace GMV 61,639 97,825 129,363 61,054 96,896 128,135 1% 1% 1%
Marketplace takerate 7.25% 10.00% 10.50% 7.80% 10.00% 10.50% -55bps 0bps 0bps

Source: Goldman Sachs Global Investment Research

4 March 2021 8
 Goldman Sachs Sea Ltd. (SE)

Disclosure Appendix
Reg AC
I, Piyush Mubayi, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or
companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific
recommendations or views expressed in this report.
Unless otherwise stated, the individuals listed on the cover page of this report are analysts in Goldman Sachs’ Global Investment Research division.

GS Factor Profile
The Goldman Sachs Factor Profile provides investment context for a stock by comparing key attributes to the market (i.e. our coverage universe) and its
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Financial Returns and Multiple use the Goldman Sachs analyst forecasts at the fiscal year-end at least three quarters in the future. Growth uses inputs
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Quantum
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Disclosures
The rating(s) for Sea Ltd. is/are relative to the other companies in its/their coverage universe:
Alibaba Group (ADR), Alibaba Group (H), Baidu.com Inc., Bilibili Inc., Dada Nexus Ltd., Huya Inc., JD.com Inc. (ADR), JD.com Inc. (H), JOYY Inc., KE
Holdings, Kingsoft Cloud, Kingsoft Corp., Lufax Holding Ltd., Meituan, NetEase Inc. (ADR), NetEase Inc. (H), OneConnect Financial, Pinduoduo Inc.,
SINA Corp., Sea Ltd., Sogou Inc., Tencent Holdings, Tencent Music Entertainment Group, Tongcheng-Elong Holdings, Trip.com Group, Vipshop Holdings,
Weibo Corp., Xiaomi Corp., iQIYI Inc.

d40b35aa90794d15830bee6881dcb9ef
Company-specific regulatory disclosures
The following disclosures relate to relationships between The Goldman Sachs Group, Inc. (with its affiliates, “Goldman Sachs”) and companies covered
by the Global Investment Research Division of Goldman Sachs and referred to in this research.
Goldman Sachs has received compensation for investment banking services in the past 12 months: Sea Ltd. ($229.68)
Goldman Sachs expects to receive or intends to seek compensation for investment banking services in the next 3 months: Sea Ltd. ($229.68)
Goldman Sachs had an investment banking services client relationship during the past 12 months with: Sea Ltd. ($229.68)
Goldman Sachs has managed or co-managed a public or Rule 144A offering in the past 12 months: Sea Ltd. ($229.68)
Goldman Sachs makes a market in the securities or derivatives thereof: Sea Ltd. ($229.68)

Distribution of ratings/investment banking relationships

Goldman Sachs Investment Research global Equity coverage universe

Rating Distribution Investment Banking Relationships

Buy Hold Sell Buy Hold Sell
Global 49% 35% 16% 64% 57% 54%

As of January 1, 2021, Goldman Sachs Global Investment Research had investment ratings on 3,072 equity securities. Goldman Sachs assigns stocks
as Buys and Sells on various regional Investment Lists; stocks not so assigned are deemed Neutral. Such assignments equate to Buy, Hold and Sell for
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Banking Relationships chart reflects the percentage of subject companies within each rating category for whom Goldman Sachs has provided
investment banking services within the previous twelve months.

4 March 2021 9
 Goldman Sachs Sea Ltd. (SE)

Price target and rating history chart(s)

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