Maybank Investment Bank Group (Maybank IBG) has upgraded Sea Ltd to a “Buy” following a sharp share price correction, citing an improved risk-reward profile and resilient growth drivers across its core businesses.
In a research note, Maybank IBG said Sea’s share price has fallen about 36% from its 2025 peak, which has largely priced in downside risks related to competition and near-term margin pressure. The bank maintained its target price of US$156, noting that growth pillars across e-commerce, digital financial services and gaming remain mostly intact.
Shopee’s ASEAN strength offsets external headwinds
Shopee’s performance in ASEAN continues to anchor Sea’s outlook, with the region accounting for around 75% of gross merchandise value (GMV). Maybank IBG noted that Lazada’s ongoing decline has effectively turned the market into a more rational two-player landscape, benefiting Shopee through an estimated 3–4 percentage point boost to GMV growth.
While investments in Shopee’s VIP programme and fulfilment infrastructure may weigh modestly on margins in the near term, the bank believes these initiatives will strengthen customer loyalty and accelerate the shift from offline to online shopping. In a bear-case scenario, intensified competition in Brazil and higher VIP-related spending could reduce Shopee’s margins by about 30 basis points, though this risk is seen as largely reflected in current market expectations.
By 2027, as Lazada becomes less relevant and VIP spending normalises, Maybank IBG expects Shopee’s margins to recover. Competition in Brazil remains a key risk, particularly on profitability rather than growth, while elevated investments by Coupang in Taiwan are being closely monitored, though Taiwan contributes less than 10% of Shopee’s GMV.
Monee emerges as a key monetisation driver
Maybank IBG highlighted Sea’s buy-now-pay-later (BNPL) platform, Monee, as an underappreciated growth and monetisation engine. The platform benefits from higher yields than core e-commerce, with instalment yields of 20–40% and relatively low non-performing loans of around 1.1% over 90 days.
BNPL penetration remains in the mid-teens, providing significant runway for expansion. Beyond Shopee, Monee leverages Sea’s more than 390 million monthly active users and rich behavioural data to extend BNPL and micro-loans off-platform — a capability the bank says few fintech peers can match.
For 2026, Maybank IBG forecasts Monee’s loan book, revenue and EBITDA to grow 38%, 36% and 27% year-on-year, respectively, positioning it as a scalable, high-margin contributor to Sea’s overall earnings.
Garena risks manageable
Garena, Sea’s digital entertainment arm, faces potential growth normalisation following a strong 2025, with Maybank IBG projecting growth of around 5% in 2026. While the risk of bookings decline due to gameplay cyclicality and reliance on a single franchise remains, the impact on Sea’s overall valuation is limited, as Garena represents only about 15% of the group’s sum-of-the-parts valuation.
Overall, Maybank IBG believes the recent sell-off has created a compelling entry point, with Shopee’s ASEAN resilience, Monee’s monetisation upside and contained risks at Garena supporting its more optimistic stance on Sea.
