Thanks Strugglingfool for the great SE write up and bringing it to the attention of this board. I started a toe hold position in late March and as my investigation proceeded, my confidence in SE grew. So in April I took a full position in SE similar to my holdings in ZM, OKTA, DDOG, AYX, ROKU, TTD, and BILI. I believe SE is just starting to roll and I already have a nice gain.
The other stocks frequently discussed on this board have had big runs already. And these stocks and my MELI position were getting to be too big. So I was looking for a new stock. I had initially overlooked SE because I knew the established position of Lazada in SE Asia.
SE may not have a clear simple business model as the other stocks discussed on this board. But conglomeration is normal for the Asian companies, even at an early stage. SE has incredible revenue growth in all 3 of its segments. I have spent considerable time in SE Asia the last 35 years, especially Thailand, my wife’s home country. The 3p sales model works very well in these countries because of all the small businesses there. If you have lived in an Asian shop house or have eaten on the streets, you know what I am talking about. Unlike the western countries, you do not see the big established brick and mortar stores; Home Depots, Walmarts, Walgreens, etc. A few are popping up but not a lot. SE can also capitalize on out of country goods sales to the locals. The final deal sealer for me was the TenCents 5 year exclusive gaming distribution agreement.
I especially appreciate this boards discussion on margins and how they relate to growth and valuation. This has given me a new yardstick to measure a companies valuation. But sometimes I feel it is ok just to chase big growth with hope that the margins and cash flow will follow. This is the case with SE. SE reminds me of MELI 5 years ago, incredible growth, multiple businesses, currency fluctuations, country protests, and slim margins. You had to pinch your nose and just jump in the water. But as MELI grew, the little ole Mercado Pago became the cash flow engine. Similar with AMZN when AWS came along and pumped the margins.
I suggest people look at SE with a different valuation perspective than many of the stocks on Saul’s board. Yes it is a little more risky. And yes watch where the margins are moving.
BTW I loved the discussion on culture conflicts between the Chinese and locals. When in Thailand I live in Chinatown of Bangkok near Yarawat Road and what used to be the secret wholesale market ally. And my wife and her family are half Chinese and half Thai. Even today, the full Thai bloods distrust Chinese influence and the half blood wizards. The Chinese are just too successful in business and jealousy develops.
-zane
long SE