$SE SEA Limited stock FY2021 financial analysis (29Mar2022)

$SE stock fell from a recent high of $372.70 to $116.98 as of 28Mar2022 US market close.  This is a drop of over 68.6%. Has the stock reached a bottom or will the decline continue?  

Extract from Motley Fool's article about $SE (dated 28Mar2022):

"The e-commerce gross orders were up by 90% year over year. Ninety percent, that's pretty stellar growth. SeaMoney total payment volume was up 70% year over year to $5 billion. Which is about 1/9th of what Block ( SQ 5.98% ) does in terms of volume. About 1% or 2% of what PayPal ( PYPL 2.12% ) does. This is a very small amount of payment volume so far, so they can keep that 70% growth rate up for several years to come.

Gross profit up 146% year over year, which shows that the business is starting to become a little more efficient. They're still losing money because they are investing so much in their growth which is fine with those numbers. Over $10 billion of cash on the balance sheet to absorb any short-term losses they need to get the business where it needs to be, and 2022 guidance what's really impressive.

SeaMoney, the digital payments platform, the revenue, expect it to grow even faster than it did in 2021. They're expecting a 155% revenue growth in the payment space and 76% in the Shopee e-commerce platform. Right now the stock has a $63 billion market cap. If it realizes its potential and grows into the Amazon ( AMZN 2.56% ) and PayPal of Southeast Asia, I think it definitely has 10 bagger potential from here."

Will this be sufficient information for us to add $SE to our current portfolio?  Let us look at their financial performance?

Sea limited overview (2014-2021)

$SE can boast a revenue growth of 127.5% from 2020 to 2021.    This is impressive growth but yet EPS has declined from -$3.39 (2020) to -$3.84 (2021), a drop of 13.3%.  

Income statement (2014-2021)

Its gross margin growth (from 2020 to 2021) has reached 39.1%.  The gross profit almost tripled from $1,349M (2020) to $3,896M (2021).  We would expect some profitability but the company continued to make a net income loss (after tax) of $2,047M (2021).  There is also continuous shares dilution that started with 257M in 2014 and ended 2021 with 533M.  Without the additional shares issued in 2021, the loss in EPS -$3.84 (2021) would have been worse (12% more).

Balance Sheet till 2021

For the 2021 balance sheet, I like the strong "cash and cash equivalent" at $9,248M, which is bigger than the total current liability.  However, the -$7,201M retained earnings continue to bring concern.  Retained earnings are a firm's cumulative net earnings or profit after accounting for dividends. They're also referred to as the earnings surplus.

cash flow till 2021

Cashflow 2021 were are follow:

from operations $209M, from investing -$3,767M, from financing $7,402M (from issue of new shares).  It remains a concern that the cashflow from operations clocked only $209M in 2021 when their revenue was $9,955M (2021).  This is where they make money from their "regular" operations and thus far, it is yet to be convincing after 7 years.

$SE performance for last one year as of 28Mar22

$SE is a company with great potential (gaming, e-commerce and fintech). For a more thorough analysis, we need to go through their quarterly and annual reports so that we can understand the operations and future developments.  It does not help with #Tencent dropping their share ownership in the company.

I would rather buy later at a higher price when their financials are better.  I will be monitoring for now.