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Shopee parent Sea turns its first annual profit

Singapore-based Sea delivered its first annual profit since the internet firm’s market debut in 2017, as strong growth in its e-commerce business helped the company post a smaller fourth-quarter loss than expected.

Shares of US-listed Sea rose more than 5 per cent on Monday, after it also forecast 2024 would be another profitable year, compounding optimism around Southeast Asian tech firms after Grab recorded its maiden profitable quarter.

The results underscored resilience in Sea’s e-commerce business, including the Shopee app, against competition from larger rivals such as Alibaba Group’s Lazada, ByteDance’s TikTok, and new entrants like PDD’s Temu.

“Despite an environment of intensified competition in Southeast Asia, we believe Shopee had a meaningful gain in market share between the start and the end of 2023,” said Sea CEO Forrest Li.

Some analysts have said Shopee gained market share during the quarter in Indonesia after TikTok’s online shopping service was banned in the country.

TikTok bought about 75 per cent of tech conglomerate GoTo-owned Tokopedia for $840 million, which allowed the Chinese social media giant to restart its online shopping business in Indonesia.

Southeast Asia’s largest internet firm posted a 23 per cent jump in quarterly e-commerce revenue, driving up overall revenue of $3.62 billion above estimates of $3.55 billion, according to LSEG.

Li said Sea expects Shopee’s annual gross merchandise volume (GMV), the value of goods sold, to grow in the high-teens range and that its adjusted core earnings would turn positive in the second half of 2024.

The company’s loss per share attributable to common investors was 19 cents, while analysts were expecting a loss of 25 cents. Annual diluted profit per share was 25 cents.

Revenue for its digital entertainment business Garena – home to popular games like Free Fire – fell about 46 per cent to $510.8 million.

  • Reporting by Jaspreet Singh in Bengaluru; Editing by Devika Syamnath and Alan Barona, of Reuters.
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