Morgan Stanley analyst Mark Goodridge reflects on Sea’s ESG contribution (NYSE:). This topic has been attracting increased investor attention.

Sea plays a crucial role in the development of emerging markets like ASEAN, LatAm and LatAm’s new economy. The company’s goal is to enhance the quality of lives of its consumers by using technology.

Two important sustainability features of SEA Ltd. are (1) Shopee and its ecommerce service. Shopee empowers SMEs and closes the gap between urban and rural distribution. Traditional SMEs can increase their revenues and profits through e-commerce. E-commerce adoption helps drive economic growth, and decrease inequalities. Goodridge stated that SEA Money is its digital financial service and provides cashless payments and other financial services for the under-banked.

An analyst acknowledged the potential ESG risk that gaming businesses pose to the company due to minor gaming addiction.

As the ASEAN governments support e-sport, we believe that there are very low risks. But, Brazil is under our watch for regulation. A positive sustainability aspect of Gaming is that Garena enables social interaction to >600mn Quarterly Active Users, which proved to be valuable given the social restrictions during COVID-19.

Goodridge also spoke out about the decline in Sea stock, which is now down nearly 50% year-to-date. However, Goodridge sees long-term structural potential in ecommerce and fintech.

Market is applying an average EV/GMV value of 0.3x for e-commerce, which is 50% less than the global peer average on 2023 consensus estimates. The analyst also concluded that the market does not value its Digital Financial Services opportunities.

Morgan Stanley’s target price of $220 suggests an upside potential close to 90%

By Senad Karaahmetovic