Originally I was interested in the eCommerce division and digital payments. Revenue growth looked very promising on the top level. What stopped me from investing was the concentration risk of their gaming division.
In the annual report
“In 2017, 2018 and 2019, our digital entertainment business contributed 88.2%, 55.9% and 52.2% of our total revenue, respectively.”
“In 2019, our top five games, which included Free Fire, contributed 94.5% of our
digital entertainment revenue”
No other game was mention other than Free Fire (looks like a clone of pubg)
It’s possible that Free Fire may contribute a majority of the 94.5% of entertainment revenue.
Another issue is that the company is running 3 different type of businesses.
Only the eCommerce and digital payment division have synergy.
In my opinion it is difficult to achieve sustained high growth without focus.
These are the reasons why I chose not to invest in SEA
Shig