They highlight headwinds for the digital entertainment segment, which is Sea’s only profitable segment. “Sea has lowered its 2022 booking guidance by 10% to US$2.6 billion-US$2.8 billion. It has faced headwinds recently, such as India banning Free Fire and Riot Games taking back distributorship from Garena, Sea’s digital entertainment arm.
UOB Kay Hian analysts John Cheong, Jacquelyn Yow and Heidi Mo have initiated coverage on Sea Limited with a “hold” call and target price of US$58.77 ($79.21).
In their note, the analysts point out that Sea’s share price has recovered after its 3QFY2022 ended Sept 30 results announcement with a narrower net loss. Despite this, they remain doubtful that the company’s cost rationalising exercise could continue to improve profitability with slower growth from the digital entertainment and e-commerce segments.
