Yuri (@therealYuriM) profile picture

Yuri

@therealYuriM

Solo investor since 2021. Mostly equities, value & GARP. Background in PE, IB and operational management.

 Cyprus
equitysearch.substack.com/
Joined April 2018
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My back of the envelope calcs imply that $SE's e-com trades at 0.2x EV/GMV and 1.2x EV/S. Pretty modest imo, given the growth (25% GMV / 36% sales FY '26E; 28%/48% yoy in Q2 '26A). The mkt is telling us that growth will fall and/or they'll burn all FCF on cloud or smth else.
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A random find via a friend: #Hengyuan, a Malaysian refiner at ~1x P/E on 1H/Q2 '26 earnings (Q3 likely higher given crack spreads trajectory). Bought some, but still thinking how I will get screwed on this one even if oil stays high. Govt interference? Crude deficit? Smth else?
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More interference from the govt generally isn't good for any business. But in this case, doesn't the govt push against involution do more good than bad to Chinese e-com? If they can't stop unreasonable competition themselves, maybe CCP can help them? (proud $BABA bagholder here)
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@pandawatch88 what do you think about this govt push? Good/bad or more nuanced for $BABA & Co?
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A few observations on $NTDOY: 1. % of digital sales 67% in Q1'26, ATH. I think 80-90% is achievable =>margins will go up. Memory costs likely pushing $NTDOY to higher % of digital 2. Effect of tariffs, memory, other costs ~$650mn p.a. I guess a large part of these is temporary /1
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3. Price increases are the right step in my opinion. I don't think extra $50 would discourage many from buying S2. Maybe $NTDOY should have increased subscription prices more. 4. Annual playing users flat for 2 years despite S2 launch. I would prefer rising engagement. /2
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5. Guidance is obviously low-balled (as usual) in terms of SW units and total profit; probably HW units too. 6. Overall earnings look fine to me. The mid- to long-term thesis is intact, so I'm thinking about adding $NTDOY here. /3
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Few things are inevitable in life. Among them are death, taxes and $SE being down a few percent day in day out. Of course, this too shall pass, but for now it's quite amusing to observe. Painful too, since $SE is by far my largest position.
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$SE is up ~50% since that point. I guess it's too early for victory laps, because a large part of this could be just momentum/liquidity-driven. Q4 report was quite good though, so I continue to hold the stock as the thesis hasn't been disproven. Key takeaways below: 1/5
Yuri (@therealYuriM) profile pictureYuri@therealYuriM21 Dec 2023
Sharing my $SE thesis. Still researching the company and have initiated a position as the valuation looks pretty attractive under certain assumptions. TLDR: current price may imply e-com valuation of <0.1x EV/GMV and ~20% EV/FCF yield in a reasonably conservative case 1/
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+ G&A expenses -34% yoy + Prudent cash management, i.e. not rushing to spend the net cash; increased cash by $1.6bn you 4/5
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- Garena paying users are still down both yoy and qoq - Fintech revenue is slowing down, although growth is still decent (+24% yoy vs +36% in Q3) - Fintech EBITDA is down qoq due to heavier marketing spend while it’s not clear what level of growth this spend can generate 5/5
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- 3% EBITDA / GMV (quite a few ecom biz already there or higher) - 1% Capex / GMV - GMV flat at $80bn (pretty conservative as it implies SEA losing mkt share, while their mkts are growing) This implies ecom EV/FCF of ~5x or 20% FCF yield which looks quite attractive IMO 7/
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Although all of the above is possible, my feeling is that the market might be overshooting towards the pessimistic scenario. I also like that management has skin in the game: they control 43% of economic rights and 72% of voting rights (founder/CEO has 18% / 60%). 9/
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I have recently initiated a significant long shares position in $SE and I’m still digging deeper to decide whether to add. Would love to hear your views, especially negative ones! Here is a nice write-up to get a feel of the company: generalist.com/briefing/sea /end
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Now they started investing again with an aim to increase market share and generated a loss in Q3. SEA has a $3.5bn net cash position and 2 profitable business lines, so they can probably continue investing in ecom for a long time. 5/
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If we apply relatively conservative mults to Gaming and Fintech OI, implied ecom EV is ~$6bn which is just ~0.1x EV/GMV with GMV at $80bn. Let’s assume that ecom reaches the following steady state at some point: 6/
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3. Ecom (Shopee). #1 market share in Indonesia, the Philippines, Malaysia, Vietnam, Singapore and Thailand. $80bn annualized GMV, +5% yoy growth. Achieved positive operating income (before SBC) in Q2 2023 as a result of cutting costs and dialing back on investments in growth. 4/
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The biz has 3 parts: 1. Mob gaming. Cash cow driven by Free Fire battle royale game (#1 most downloaded mobile game, ~500mn quarterly active users; but the users and revenue have been falling). Could be a melting ice cube, but I don’t think they are worth zero. 2/
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2. Fintech (mostly BNPL and cash loans; also payments, insurance, etc). Became profitable in 2023 and growing nicely (rev +35% yoy). NPLs look OK so far, but no one knows what happens to them if/when they go through a credit cycle (there is not enough historical evidence). 3/
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