Sea Limited (SE): what the price assumes

Generated: 2026-08-08 · Source: https://boothcheck.com/report/SE

Headline

Field	Value
Ticker	SE
Company	Sea Limited
Sector / Industry	Industrials / Security Services
Current price	$114.88/sh

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	whole-company
Operating margin (value-band context)	6.3%
Operating margin today	8.7%
Margin compression (value-band)	-2.4pp
Must persist for	12.6y
Multiple paid	35x operating income

The operating-margin figure is value-band context at year 6: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 11.9% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.2 years.

Reconcile: at the x-ray's 9.3% required return this reads ~7.3 years; the models below use their own rates.

How unusual the bet is: elevated (limited comparison data)

Reference	Value
sustained it ~10 years at this level	14%
implied end-window share	1%

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Family	Median price/FV	Models	Reads
Asset	3.61x	5	expensive
Earnings	1.55x	4	expensive
Relative	1.57x	5	expensive
Growth	0.65x	3	justifies

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.0%); the inversion above states its own rate.

Per-Model Detail (n=17)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$314.25	0.37x	yes	FCF base $5.3B, growth 24% (input: historical growth), terminal g 4.0%, WACC 9.0%, 7yr projection
DCF Exit Multiple	Growth	$175.91	0.65x	yes	Exit EV/EBITDA: 28.2x / 30.2x / 32.2x (bear / base = today's held flat / bull), 7yr
Relative Valuation	Relative	$73.35	1.57x	yes	P/E 26.54x (blended: static sector reference 18x + trailing (TTM) 46x), scenarios: 21.4x / 26.5x / 31.7x (bear / base = reference held flat / bull), EV/EBITDA 17.46x
Simple DDM	Growth	—	—	no	—
Two-Stage DDM	Growth	—	—	no	—
Simple Excess Return	Asset	$26.73	4.30x	yes	BV/sh $19.63, ROE (TTM) 12.6%, ke 9.3%
Two-Stage Excess Return	Asset	$30.97	3.71x	yes	5yr excess ROE then converge to ke=9.3%
Discounted Future Market Cap	Growth	$142.56	0.81x	yes	Rev $22.9B, growth 24% (input: historical growth; tapered), Terminal P/S: 2.6x / 3.2x / 3.8x (bear / base = today's held flat / bull, cap 12x)
Peter Lynch Fair Value	Relative	$30.24	3.80x	yes	EPS $2.52, growth 1% (input: historical EPS growth), PEG=32.72 (Overvalued)
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	$4.14	27.75x	yes	Normalized EBIT (5y avg op income, one-time charges added back) $0.05B × (1−21%) / WACC 9.0% → EPV (no growth) (excluded from median)
Residual Income	Asset	$31.85	3.61x	yes	BV $19.63 + 5yr PV of (ROE (TTM) 12.6% − Kₑ 9.3%) × BV; BV grows 8.2%/yr
Graham Number	Asset	$33.36	3.44x	yes	√(22.5 × EPS $2.52 × BVPS $19.63) — Graham's conservative floor
EV/EBITDA Relative	Relative	$47.71	2.41x	yes	EBITDA $2.36B × sector EV/EBITDA 12.0x
FCF Yield	Earnings	$79.79	1.44x	yes	FCF $4510.7M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF Yield	Earnings	$69.21	1.66x	yes	SBC-adj FCF $3.89B (FCF $4.51B − SBC $0.62B) capitalized at Kₑ
Ben Graham Formula	Earnings	$81.31	1.41x	yes	EPS $2.52 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/B	Asset	$32.85	3.50x	yes	BV $19.63 × (ROIC 15.1% / WACC 9.0%)
P/Sales Sector	Relative	$89.85	1.28x	yes	Revenue $22.94B × sector P/S 2.5x
PEG Fair Value	Relative	$94.50	1.22x	yes	EPS $2.52 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings Yield	Earnings	$27.24	4.22x	yes	EPS $2.52 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	—	—	no	—
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Solvency

Field	Value
Net cash	$9.2b
Net debt / NOPAT (after-tax)	-5.89x (net cash)
Net debt / operating income (pre-tax)	-4.65x (net cash)
Interest coverage	59.1x
Share count CAGR (dilution)	4.6%
Burning cash	no

Bullet Takeaways

• Three businesses sit inside one holding company and feed each other in order: a games studio produces the profit, a marketplace produces the users, and a lender turns those users into a book that reached 9.9 billion dollars of principal outstanding by March 31, 2026.

• The sharpest risk is the newest one: that loan book grew 71.3% in a year, and the allowance for credit losses on loans receivable rose to 947.8 million dollars at March 31, 2026 from 812.8 million three months earlier.

• Shopee's revenue grew 45.1% in the first quarter of 2026 while adjusted EBITDA, the company's own segment profit measure, fell to 223.2 million dollars from 264.4 million a year earlier, and that divergence is the number worth following.

Bull Case

Three businesses that most companies would never put under one roof are under this one, and the reason is the cost of finding a customer. Garena, the games arm, took 931.4 million dollars of bookings in the first quarter of 2026 from 72.6 million paying users, a paying base up 12.4% on the year. Shopee, the marketplace, moved 37.3 billion dollars of goods across 4.0 billion orders in the same three months. Monee, the lending arm, does not have to go looking for borrowers. It finds them on Shopee.

The annual report states the link rather than leaving it to inference: "the Shopee ecosystem offers a unique advantage for Monee in terms of user acquisition." That is a moat claim written down and, unusually, a falsifiable one. The same paragraph names the failure condition, that a decline in Shopee user growth or engagement would hurt the financial services business directly. Most companies describe their advantage in language that cannot be checked. This one described the switch that turns it off.

The economics behind the structure have turned over. For the year ended December 31, 2025 the group earned about 8.7 cents of operating profit on each revenue dollar, on 22.9 billion dollars of revenue, and generated 5.0 billion dollars from operations. Return on equity ran 12.5% against a book value of 19.63 a share. A company that spent most of a decade in losses now converts sales into more cash than it books as earnings, which is what happens when marketplace take rates rise faster than the cost of moving the parcels.

The first quarter of 2026 pushed further in the same direction. Group revenue reached 7.1 billion dollars, 46.6% above the year-ago quarter, with gross profit up 40.7%. The mix inside Shopee moved the useful way: core marketplace revenue, meaning transaction fees and advertising, rose 61.0% to 3.8 billion dollars, while the logistics-linked value-added line fell 8.1%. Selling advertising is a better business than carrying boxes, and the company is doing more of the first and less of the second.

Management has also started buying stock instead of selling it, repurchasing 1.8 million shares for 168.4 million dollars during the quarter under a 1.0 billion dollar authorization. For a company that funded its first decade by issuing equity, a change of direction that size says something about where the board thinks value sits.

The bull case is not that any one of the three arms wins. It is that running them together costs less than running them apart.

Bear Case

The competition here is not a list of rivals to out-execute. It is a category with structurally different economics. The annual report describes e-commerce competitors carrying "longer operating history, different business models and growth strategies, and greater access to financial, technological and marketing resources than we do," then names the newer pressure directly: "we may face increasing competition from social media and social-commerce platforms, online and app-based search engines through which products and services may be researched and sold." The filing's own summary of the market is one line long: "As e-commerce is evolving in our markets, competition for market share is particularly intense."

The effect already shows in the accounts. Shopee's revenue grew 45.1% in the first quarter of 2026 while its adjusted EBITDA, the segment profit measure the company reports, fell to 223.2 million dollars from 264.4 million a year earlier. Management's framing is that 2026 is a year of leaning in to deepen competitive moats. That is a decision to spend, and it is the right decision if the spending buys something that lasts. It is also, from the outside, indistinguishable from a business that cannot raise price.

Which makes the spending question load-bearing, because of what the quote already assumes. Today's price is roughly 35 times the operating income the year ended December 31, 2025 produced, and reaching it requires company-wide operating growth to hold at the fastest pace the business can fund from its own profits for about 13 years. Of the comparable fast-growers with a long enough record to check, only about 14% held that pace even ten years. Two of the four reference checks had usable data here, with no read on the company's own record and none on where peer multiples sit, so that comparison is thinner than it appears. A thin read is a weaker claim, not a gentler one.

The lending arm deserves separate attention, because it changes what kind of company a holder owns. Consumer and SME loans principal outstanding reached 9.9 billion dollars at March 31, 2026, up 71.3% on the year, with 8.8 billion of it carried by Sea itself. Loans more than 90 days past due were 1.1% of the book and stable through the quarter. That is a good ratio, and it is a ratio whose denominator grew 71.3%, which flatters any past-due measure while the growth continues. The allowance for credit losses on loans receivable rose to 947.8 million dollars at March 31, 2026 from 812.8 million at the end of 2025. The filing is not coy about the dependency: "The success of our credit and banking businesses depends on the effective management of credit risk." A marketplace that misprices a promotion loses a quarter. A lender that misprices credit finds out a year later, after the growth has already been reported.

The concession is that none of this is a solvency argument. Holdings of about 4.0 billion dollars in cash and equivalents plus 2.2 billion of restricted cash sat on the March 31, 2026 balance sheet, borrowings are small, and interest is covered many times over. Nothing forces a bad decision on a deadline. The bear case is that the growth stops being worth what it costs, not that the funding runs out.

Valuation

Duration is the entire question here, and the arithmetic behind it is unusually clean. The price does not require better margins. The operating margin it needs by year six is about 6.2%, and the business already earns about 8.7% on the year ended December 31, 2025. What it requires instead is that the current pace keep going, at roughly 35 times that year's operating income.

Persistence has a length. The figure is about 13 years of company-wide operating growth running at the fastest rate the business can fund out of its own profits, and each percentage point of growth moves that horizon by roughly two years. The answer is therefore sensitive to an input nobody observes directly. Among comparable fast-growers with a long enough record to check, about 14% sustained that pace even ten years. Two of the four reference checks had usable data, which makes the comparison directional rather than settled.

The methods arrange themselves the way they do for any business whose value sits ahead of it. The quote lands close to four times where asset-based approaches reach, because those read a book value of 19.63 a share and go no further. It sits above the earnings-power methods too, and one of those is worth naming for the reason it lands low: capitalizing a five-year average of operating income produces a small number precisely because four of those five years contained losses. Only the forward-growth methods reach the price. That pattern is the signature of a durability premium, not of an arithmetic error.

The balance sheet does not enter the argument, which is itself worth stating. Cash and equivalents of about 4.0 billion dollars at March 31, 2026, restricted cash of 2.2 billion, borrowings small enough that interest expense is covered many times over, and repurchases running where issuance used to. None of that makes the price cheap. It does mean the thesis gets settled by operating results rather than by a financing deadline, which is a meaningfully different way to be wrong.

Catalysts

First-quarter 2026 results, reported May 12, 2026, arrived with a commitment specific enough to be graded. Management guided Shopee's annual gross merchandise value to grow around 25% year on year in 2026, with full-year adjusted EBITDA no lower than 2025 in absolute dollar terms. The quarter ran ahead on the volume half, with GMV up 30.2%, and behind on the profit half. Those two halves have to meet before the year closes, and how they meet is the single most informative thing the next few reports will show.

Garena had what management called its best quarter since 2021, driven by Free Fire alongside a record contribution from Arena of Valor. Bookings rose 20.1% to 931.4 million dollars while quarterly active users were roughly flat, 666.5 million against 661.8 million a year earlier. The growth came from monetization rather than reach: average bookings per user reached 1.40 dollars against 1.17. A games business that grows by charging existing players more carries a different risk profile from one that grows by adding them.

On the lending side the recurring disclosure to follow is the past-due ratio measured against a book that is still compounding. Of the 9.9 billion dollars of loans principal outstanding at March 31, 2026, about 1.1 billion was funded by other financial institutions through channeling arrangements rather than by Sea itself. Management named Brazil among the early markets for expansion, which places part of the credit book outside Southeast Asia and outside the Shopee funnel the company describes as its acquisition advantage.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• BIP (BIP)
• FY2025 20-F: …from investment funds, operating companies acting as strategic buyers, construction companies, commercial and investment banks, and commercial finance companies. Many of these competitors are substantially larger and have considerably greater financial, technical and marketing resources than are available to us. Some…
• FY2025 20-F: …potentially result in reduced value for assets, or in extreme cases, a stranded asset." Marketing Our marketing efforts focus on leveraging our competitive advantages described and our group's world-class operating businesses described in Item 4.B "Business Overview". We also leverage our relationship with…
• NGG (NGG)
• (no filing in the citation store)
• LNG (CHENIERE ENERGY, INC.)
• FY2025 10-K: …contract terms, to the extent customers elect to take delivery of their LNG, (2) adjustments to the consumer price index and (3) the outcome of certain contingent events, including the achievement of milestones upon which delivery of LNG under certain contracts is conditioned. 87 Table of Contents CHENIERE ENERGY,…
• FY2025 10-K: …Factors and Competition , we expect the scope and extent of our future climate and sustainability initiatives 17 Table of Contents to evolve accordingly. While we have not incurred material direct expenditures related to climate change, we are proactive in our management of climate risks and opportunities, including…
• UGP (UGP)
• (no filing in the citation store)
• EIX (EDISON INTERNATIONAL)
• FY2025 10-K: …tax positions in accordance with the authoritative guidance. Key Assumptions and Approach Used. In determining whether it is more likely than not that all or some portion of net operating loss and tax credit carryforwards can be utilized, management analyzes the trend of GAAP earnings and then estimates the impact of…
• FY2025 10-K: 7% of which was associated to counterparties with an investment grade rating of A or higher and 67.2% was associated with a CPUC approved electronic broker and exchange platform operating under a rigorous risk management framework. For more information related to credit risks, see "Notes to Consolidated Financial…
• RCL (ROYAL CARIBBEAN CRUISES LTD)
• FY2025 10-K: …restructuring charges and other initiatives expenses; (ii) impairment and credit losses; and (iii) gain on sale of controlling interest. Net Yields represent Adjusted Gross Margin per APCD. We utilize Adjusted Gross Margin and Net Yields to manage our business on a day-to-day basis as we believe that they are the…
• FY2025 10-K: …our competitors or otherwise compete effectively with other vacation alternatives, our results of operations and financial position could be adversely affected. If we are unable to appropriately manage our cost and capital allocation strategies with our goal of satisfying guest expectations, it may adversely impact…
• CEG (CONSTELLATION ENERGY CORPORATION)
• FY2025 10-K: …energy prices, partially offset by lower load volumes • favorable retail load revenue of $75 primarily due to higher contracted energy prices and load volumes 68 Table of Contents 2025 vs. 2024 $ Change % Change Description Other Power Regions 77 1.4 % • favorable retail load revenue of $50 primarily due to higher…
• FY2025 10-K: ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Other Key Business Drivers for more information on the Russia and Ukraine conflict. Commodity Derivative Activity The following table provides detail on changes in our commodity derivative contract net assets (liabilities)…
• D (DOMINION ENERGY, INC)
• FY2025 10-K: …revenue consists primarily of alternative revenue programs, gains and losses from derivative instruments not subject to hedge accounting and lease revenues . The Companies record refunds to customers as required by state commissions as a reduction to regulated electric sales or regulated gas sales, as applicable. The…
• FY2025 10-K: 150 Note 26 . Operating Segments The Companies are organized primarily on the basis of products and services sold in the U.S. A description of the operations included in the Companies' primary operating segments is as follows: Primary Operating Segment Description of Operations Dominion Energy Virginia Power Dominion…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Sea Limited Q1 2026 results release, May 12, 2026