Sea Ltd's e-commerce unit likely to drive up earnings estimates - JPMorgan

investing.com:

Investing.com — Sea Limited 's (NYSE:SE) e-commerce unit will likely drive positive revisions in the Singaporean conglomerate's near-term outlook, according to analysts at JPMorgan.

On Monday, Sea — a tech giant in Southeast Asia comprised of its Shopee e-commerce business, SeaMoney financial services arm, and Garena gaming division — posted its first-ever profitable year. Sea said its annual performance was bolstered in large part by «meaningful» market share gains by Shopee.

In a note to clients on Tuesday, the JPMorgan analysts improved their rating of Sea to «Overweight» from «Neutral,» citing Shopee's strong returns despite stiff competition from Alibaba-backed Lazada and Indonesia's Tokopedia.

"[I]n the current competitive environment, [Sea] is likely to continue increasing e-commerce commissions while reducing the intensity of sales and marketing spend," the analysts wrote.

However, the analysts flagged that higher take-rates — or how much money Sea makes from e-commerce transactions — could lead some third-party sellers to seek out alternative platforms. Earnings expectations could subsequently prove to be volatile, they argued, adding that Sea's share price performance could in turn be choppy.