Asean E-sports

Sector outlook

Neel Sinha Growth of E-sports in Asean

[email protected] E-sports gamer base poised to resume growth
+65 6416 7874
Following a growth hiatus in 2022 from the easing of pandemic restrictions, we
Daxin Lin expect the user base to see a c.5% Cagr until 2027. In our view, instrumental to this
+65 6416 7815 will be the resumption of physical E-sports tournaments. Within Asean, Indonesia
is the largest active gamer market followed by the Philippines. Mobile dominates
the usage medium (the PC and console mediums are still relevant), and while
lifestyle & puzzles account for the lion’s share of downloads, revenue is driven by
the action & strategy genre. Garena is the only sizeable publisher in Asean so far.
We expect a gamer growth recovery after the post-pandemic correction
7 November 2023 q Mobile game downloads and revenue in 1H23 in Asean saw a 15%-20% HoH correction
after the relaxation of pandemic lockdowns, leading to lower gamer engagement levels.
South East Asia q That said, we think the gamer base in Asean should grow 4%-5% annually following
normalisation; third-party forecasts suggest the same. The gamer population across
Internet Asean is at c.20% penetration of the total population.
q In our view, a catalyst for this is the resumption of physical E-Sports tournaments and
Sea Limited SE US
Rec BUY events promoting various leading titles. Android and Apple platforms (iPhone and iPad)
Market cap US$25.4bn are almost evenly split at 49% and 51%. We estimate PC/console at below 20%.
3M ADV US$342.6m
Price US$44.79 Indonesia is the largest gamer market in Asean followed by the Philippines
Target US$145.00 q In Asean, Indonesian gamers, at c.64m, account for the lion’s share (54%) of the pie
Up/downside +223.7%
followed by c.32m Philippine gamers at 27%.
q Both countries have grown faster than the rest of Asean at a 3.5%-5.5% three-year Cagr.
Upcoming Expert q Vietnam gamers’ three-year Cagr of c.4% is noteworthy but is off a low sub-6m base.
speaker session Action & strategy genre is where the revenues are earned
q In terms of genre, downloads for lifestyle & puzzles trump all categories at 65%-70%.
Nicholas Aaron Koo, q However, action & strategy comprise c.20% of downloads and account for 55%-60% of the
Advisor to the Board of gaming revenue in Asean.
Global E-Sports q Other genres (sports & racing and casino) are small at 3%-6% of mobile gaming revenue.

Federation and currently Garena is the only sizeable Asean publisher among the roster of top titles
COO of Nasdaq-listed q Garena is the only sizeable publisher in Asean currently, with c.70% of revenue by our
Global Star Acquisition estimate coming from its hit title Free Fire (and Free Fire Max) and the balance largely
Inc., will be talking about from Tencent titles the company customises for Asean as well as some smaller self-
developed titles.
his journey, opportunities
q While Free Fire is arguably among the best in class in the action (Battle Royale) genre,
and challenges in the the pipeline of new titles from Garena is amorphous.
space. He has over 20 q Garena accounts for c.6% of our SEA Ltd target price of US$145, at a 14x FY25CL PE,
years of diverse a c.20% discount to the gaming developer universe.
experience having worked
Mobile gamers in Asean-6
for MNCs, being a co-
founder and entrepreneur
in businesses and having
served in investment
committees of VC and PE

www.clsa.com Source: CLSA, Statista

CLSA and CL Securities Taiwan Co., Ltd. (“CLST”) do and seek to do business with companies covered in its research reports. As such,
investors should be aware that there may be conflicts of interest which could affect the objectivity of the report. Investors should consider
this report as only a single factor in making their investment decisions. For important disclosures please refer to page 18.
     
 Growth of E-sports in Asean Asean E-sports

Recovery expected post pandemic correction

Mobile game downloads and revenue in 1H23 in Asean saw a HoH correction of
15%-20% following the relaxation of pandemic lockdowns, leading to lower gamer
engagement levels.

Figure 1 Figure 2

Mobile games downloads in Asean Mobile games revenue in Asean

Source: CLSA, Sensor Tower Source: CLSA, Sensor Tower

Figure 3 Figure 4

Mobile game downloads in Asean by mobile device Mobile game revenue in Asean by mobile device

Source: CLSA, Sensor Tower Source: CLSA, Sensor Tower

By genre, lifestyle & puzzle games are the mainstream games. Adult gamers,
potentially given their family and workplace responsibilities, generally appear to
prefer to play hypercasual games. Such games are defined by their simplicity (both
gameplay and user interface), infinite looped mechanics (think of the never-ending
stages of Candy Crush, or the run-till-you-lose Temple Run) and can often be played
while multitasking. Other popular hypercasual game titles that comes to mind
include the likes of Angry Birds, Pokemon GO and Subway Surfers, and most of such
games would also fall under the lifestyle & puzzle genre.

We think that the gamer base in Asean should grow 4%-5% annually after
normalisation, and third-party forecasts suggest the same. The mobile gamer
population across Asean is at c.20% penetration of the total population, mostly in
urban populations where the adoption is expectedly much higher.

Find CLSA research on Bloomberg, Thomson Reuters, FactSet and CapitalIQ - and profit from our evalu@tor proprietary database at clsa.com

7 November 2023 [email protected] 2

     
 Growth of E-sports in Asean Asean E-sports

Figure 5

In 2022, mobile gamers Mobile gamers in Asean

represented one-sixth of
the total Asean population
and are projected to grow
at a 5% Cagr over the next
five years

Source: CLSA, Statista

Figure 6

The mobile gamer Mobile gamer population in Asean

population across Asean is 2021 2022 2023E 2024E 2025E
at c.20% penetration of the Indonesia (ID) 60 60 64 68 71
total population, mostly in Philippines (PH) 31 30 32 33 35
urban populations where
Malaysia (MY) 8 8 8 8 9
the adoption is expectedly
Vietnam (VN) 7 7 7 7 8
much higher
Thailand (TH) 5 5 6 6 6
Singapore (SG) 1 1 1 1 1
Total mobile gamer population 111 111 118 124 130
Asean total population 589 600 605
% mobile gamer population 19% 18% 20%
Source: CLSA, Statista, Google, Temasek, Bain & Company

In our view, a catalyst for this is the resumption of physical E-Sports tournaments
and events promoting various leading titles. In addition to being the home of
numerous E-Sports tournaments such as Dota’s The International and the Free Fire
World Series, the region is among the first globally to recognise E-Sports as a
medal-sporting event with its debut at the 18 th Asian Games in Jakarta-Palembang
in 2018 as well as the 2019 Asean Games.

7 November 2023 [email protected] 3

     
 Growth of E-sports in Asean Asean E-sports

Figure 7

E-sports now has its own Video games featured at the SEA Games
SEA Games since 2019 Video game title Platform Genre Publisher in SEA
Attack Online 2 PC First-person shooter Wicked Interactive
Crossfire PC First-person shooter Smilegate
Dota 2 PC Online battle arena Valve
FIFA Online 4 PC Sports Nexon, Tencent, Garena
Starcraft II PC Real-time strategy Blizzard Entertainment
Garena Free Fire Mobile Battle royale Garena
Third-person shooter
Hearthstone PC Card game Blizzard Entertainment
League of Legends PC Online battle arena Riot Games
League of Legends: Wild Rift Mobile Online battle arena Riot Games
PUBG Mobile Mobile Battle royale Level Infinite (Tencent)
Third-person shooter
Arena of Valor Mobile Online battle arena Garena
Mobile Legends: Bang Mobile Online battle arena Moonton
Tekken 7 Console Fighting game Bandai Namco
Valorant PC First-person shooter Riot Games
Source: CLSA, SEA Games

7 November 2023 [email protected] 4

     
 Growth of E-sports in Asean Asean E-sports

Figure 8

Southeast Asia is a growing Major E-Sports tournaments in Asean 2023

hotbed for E-sports Tournaments Game Platform
tournaments Arena of Glory Arena of Valor Mobile
RoV Pro League Arena of Valor Mobile
Brawl Stars Championship Brawl Stars Mobile
Call of Duty Mobile World Championship Call of Duty Mobile Mobile
Garena Masters Call of Duty Mobile Mobile
Perfect World Arena Premier League Counter Strike: Global Offensive PC
IESF World E-Sports Championship Counter Strike: Global Offensive PC
B5vip Championship Dota PC
The International Dota PC
Bali Major Dota PC
Dota Pro Circuit Dota PC
eK League FIFA Console
Free Fire World Series Free Fire Mobile
ESL Snapdragon Pro Series Free Fire Mobile
Free Fire Pro League Free Fire Mobile
Free Fire Clash Squad SEA Cup Free Fire Mobile
LCK Academy Series Championship League of Legends PC
Empyrean Cup League of Legends PC
Pacific Challengers League League of Legends PC
LCK Challengers League League of Legends PC
Wild Rift League Asia League of Legends: Wild Rift Mobile
Mobile Legends Professional League Mobile Legends Mobile
IESF World E-Sports Championship Mobile Legends Mobile
ESL Snapdragon Pro Series Mobile Legends Mobile
Flash Ops Holiday Showdown Overwatch PC
Overwatch WDG Overwatch PC
UNITE Open Pokemon UNITE Mobile
PUBG Global Championship PUBG PC
PUBG Mobile Regional Clash PUBG Mobile Mobile
PUBG Mobile Premier Series PUBG Mobile Mobile
Malaysia E-Sports League PUBG Mobile Mobile
Predator League 2024 Valorant PC
ESL Clash of Nations Valorant PC
AfreecaTV Valorant League Valorant PC
Valorant Challengers Valorant PC
Source: CLSA, EGamersWorld, Liquipedia

Game streaming critical to growth

In addition to playing the games, the population is also spending a significant
amount of time watching game-related content. Popular game streaming platforms
in the region includes YouTube, Twitch, BIGO Live (JoYY Inc), Kitty Live and BeLive.

According to Statista, the games streaming market in Asean is forecast to reach

US$0.51bn in revenue in 2023 and is projected to grow at a Cagr of 11.56% over
the next five years. With expected increases in revenue, user base and average
revenue per user, this market segment is seemingly gaining traction and becoming
increasingly popular in the region.

The interaction between Due to the nature of game streaming, it is increasingly playing a critical role in the
streaming platforms and growth of E-Sports in the region. As the E-Sports industry grows, streaming
game publishers is creating platforms benefit from more users who want to view the E-Sports gameplay. In turn,
a cycle of growth
game developers/publishers are increasingly tapping on streamers as a marketing

7 November 2023 [email protected] 5

     
 Growth of E-sports in Asean Asean E-sports

strategy, which benefits the growth of the video streaming sector, resulting in a
virtuous cycle of growth.

Figure 9 Figure 10

Revenue and user base of game streaming industry in Southeast Asia ARPU of game streaming industry in Southeast Asia

Source: CLSA, Statista Source: CLSA, Statista

Mobile gaming taking centre stage

A relatively young demographic in Asean, growth in mobile internet connectivity
and increasingly affordable mobile devices have been the key growth enablers in
our view. This is driving the region to a mobile-first economy beyond the realm of
gaming. In the gaming space, mobile has largely squeezed out traditional mediums
of PC/console games.

According to Statista, mobile gamers have grown to represent c.18% of the total
Asean-6 population in 2022, up from c.14% in 2018, and is estimated to grow at
5% Cagr over the next five years. Similarly, Newzoo reports that over 82% of
Asean’s urban online population are gamers and mobile gaming leads by a
significant margin over PC and console. Specifically, 80% of the urban population
plays games on mobile devices, 69% on PC and 57% on consoles.

Medium-term mobile gaming trends

Indonesia and Philippines are the largest gamer markets in Asean
According to Sensor Tower, mobile game downloads in Asean grew at a c.31% Cagr
from 2014 to 2022, while net revenue grew c.20% over the same period. Indonesia
has the largest user base for mobile games in Asean followed by the Philippines.
The two countries combined account for an estimated c.80% of gamers in Asean.

7 November 2023 [email protected] 6

     
 Growth of E-sports in Asean Asean E-sports

Figure 11

ID and PH combined Mobile game downloads by country

account for an estimated
80% of gamers in Asean

Source: CLSA, Sensor Tower

But Thailand, Malaysia and Singapore bring in the most money

Despite having a smaller gamer base, countries like Thailand, Malaysia and
Singapore bring in the most dollars – we assume that given they are in as somewhat
more affluent economies, gamers in these countries have a higher propensity to pay
for various options on the gaming portals. Thailand is the largest contributor of
mobile game revenue in the region at 23% in 2022, followed by Malaysia at 20%.
Of note is Singapore, which has the highest spending per user despite having one
of the smallest user bases, contributing 18% of regional mobile game revenue,
behind Malaysia.

Figure 12

Thailand is the largest Mobile game revenue by country

contributor of mobile game
revenue in the region at
23% in 2022, followed by
Malaysia at 20%

Singapore, which despite

having one of the smallest
user base, has the highest
spending per user

Source: CLSA, Sensor Tower

Lifestyle & puzzles lead downloads

The lifestyle & puzzles genre leads downloads by a wide margin. However, the
characteristics of such hypercasual games also greatly limit monetisation
capabilities, in our view. Due to the lack of a robust in-game economy and the free
download cost of most hypercausal games, revenue is mostly generated from
advertisements.

7 November 2023 [email protected] 7

     
 Growth of E-sports in Asean Asean E-sports

Figure 13

Lifestyle & puzzle games Downloads by genres in Asean

such as Subway Surfers,
Pokemon GO and Candy
Crush represent the bulk of
mobile games downloads in
Southeast Asia

Source: CLSA, Sensor Tower

The money is in the Action & Strategy genre

Action & strategy type games produce the most revenue. Due to the highly
competitive nature and high customisability of most action/strategy games, game
developers have a whole host of monetisation strategies to provide paying users an
edge over their fellow gamers.

Figure 14

On the other hand, action & Revenue by genres in Asean

strategy games produce the
most revenue

Lifestyle & puzzle games,

despite the large amount of
downloads, do not generate
much revenue

Source: CLSA, Sensor Tower

7 November 2023 [email protected] 8

     
 Growth of E-sports in Asean Asean E-sports

Figure 15

Garena’s Free Fire and Top 10 games in Asean by YTD downloads

Mobile Legends are the two
most downloaded games
YTD in the region

Source: CLSA, Sensor Tower

Figure 16

They also generate the Top 10 games in Asean by YTD revenue

most revenue YTD

Source: CLSA, Sensor Tower

Figure 17

Roblox clinched the top spot Top 10 games in Asean by MAU

in terms of monthly active
users (MAU), while EA
Sports’ FC Mobile, Subway
Surfers and Garena’s Free
Fire are more or less tied for
second place

Source: CLSA, Sensor Tower

7 November 2023 [email protected] 9

     
 Growth of E-sports in Asean Asean E-sports

Garena’s journey to mobile gaming

Sea Limited’s Garena is one of the few gaming companies in the region that has
been able to successfully ride the rapid growth of the mobile industry. Initially best
known among its early users as a gaming and social platform (now called Garena+)
with a wide selection of the most popular PC games such as Warcraft III, Left 4 Dead
and Call of Duty, Sea Limited’s gaming arm was able to recognise that Asean is
increasingly shifting towards a mobile-first economy. While the gaming and social
platform Garena+ continues to service PC gamers, attention has shifted primarily
to developing its mobile game business.

Against this backdrop, Garena developed its hit publication Free Fire, which went
on to become one of the most successful mobile games not just in Asean, but
globally. Other local peers from Garena’s early days, most notably Thailand-based
Asphere Innovations (previously known as Asiasoft, notable for being the
distributor of several online PC games such as MapleStory and Ragnarok Online),
tried the transition towards mobile but was not as successful.

Figure 18

The Garena platform was Garena’s early game platform

well known among its early
users for its wide selection
of PC games

Source: Garena

In addition to Free Fire, other notable mobile games in Garena’s portfolio include
Arena of Valor, Garena’s second largest game after Free Fire, and two new titles that
have come to market recently: Undawn, an open-world zombie survival game, and
Black Clover Mobile, an action role-playing (RPG) mobile title. Admittedly, these
other titles had not been able to replicate the success of Free Fire.

7 November 2023 [email protected] 10

     
 Growth of E-sports in Asean Asean E-sports

Figure 19 Figure 20

Garena Free Fire promotional media Arena of Valor promotional media

Source: Garena Source: Garena

Figure 21 Figure 22

Undawn promotional media Black Clover Mobile promotional media

Source: Garena Source: Garena

Active user base sustainability – we still expect c.15% downside

One of the key drivers of Garena’s business is its user base, which benefitted
substantially during the pandemic. The segment added some 375m quarterly active
users (QAU) throughout FY20 to 9M21 due to the lockdowns, achieving record
QAU of 729m in 3Q21.

Since then, however, most of these gains has been lost following the pandemic,
with QAU declining to 545m in 2Q23. Despite the surprising increase in QAU in
2Q23, possibly due to the resumption of physical gaming tournaments, we still
maintain our expectation that QAU will likely drift lower by 13%-15% to around
430m levels over coming quarters.

7 November 2023 [email protected] 11

     
 Growth of E-sports in Asean Asean E-sports

Figure 23

Garena added c.375m Garena QAU

quarterly active users
through FY20 to 9M21,
achieving record QAU of
729m in 3Q21

Source: CLSA, Company data

Free Fire app stats versus key comps

According to Sensor Tower, Free Fire’s monthly downloads seems to have stabilised
between 15m and 20m, and monthly active users between 200m and 250m. This is
significantly higher than its closest competitors PUBG Mobile and Call of Duty
Mobile.

Against other mobile games, Free Fire is the most downloaded title, as well as having
the second highest net revenue YTD in Asean, close behind Mobile Legends. In the
action/strategy genre, Free Fire has the highest monthly active users in the region
at 210mn, double that of the first runner up, Clash of Clans.

Figure 24

Free Fire’s monthly Free Fire global monthly downloads

downloads seems to have
stabilised at 15m-20m, and
monthly active users at
200m-250m

Source: CLSA, Sensor Tower

7 November 2023 [email protected] 12

     
 Growth of E-sports in Asean Asean E-sports

Figure 25 Figure 26

Free Fire downloads by country Free Fire downloads by version

Source: CLSA, Sensor Tower Source: CLSA, Sensor Tower

Figure 27 Figure 28

Global downloads vs key comps Global MAU vs key comps

Source: CLSA, Sensor Tower Source: CLSA, Sensor Tower

Figure 29

Garena’s Free Fire and Average time spent per user per month vs key comps
Mobile Legends are the two
most downloaded games
YTD in the region

Source: CLSA, Sensor Tower

7 November 2023 [email protected] 13

     
 Growth of E-sports in Asean Asean E-sports

Figure 30

Free Fire is the most Top 10 action & strategy games by downloads YTD in Asean
downloaded Action-type
mobile game YTD in
Southeast Asia

Source: CLSA, Sensor Tower

Figure 31

It generated the second Top 10 action & strategy games by revenue YTD in Asean
highest revenue YTD in the
same peer group in the
region

Source: CLSA, Sensor Tower

Figure 32

It also has the highest MAU Top 10 action & strategy games by latest MAU in Asean

Source: CLSA, Sensor Tower

7 November 2023 [email protected] 14

     
 Growth of E-sports in Asean Asean E-sports

Sea Ltd: maintain target price of US$145 and BUY rating

We have made no changes to our forecasts for Sea Ltd and maintain our target price
of US$145. Our SOTP-based valuation comprises Garena, Shopee and SeaMoney,
as well as 23CL estimated net cash levels. Garena, which accounts for c.6% of our
target price, is valued based on a 14x 25CL PE multiple. Shopee is valued on a 25CL
P/Sales multiple of 4.0x, which we deem fair versus global competitors as growth
expectations are far higher, and we believe that Shopee will be a key beneficiary in
the Asean ecommerce space. We value the Digital Financial Services (SeaMoney)
business on a 10x 27CL P/Sales multiple, discounted back to a FY22 basis at a
13.6% WACC.

Figure 33

SOTP valuation
Segment Valuation method Base value Multiple Valuation Per ADR
(US$m) (x) (US$bn) (US$)
Garena 25CL PE on adjusted net earnings 388 14.0 5.4 8.3
Shopee 25CL P/Sales 12,554 4.0 50.2 76.5
SeaMoney 27CL P/Sales (disc. back to FY22 at a 13.6% WACC) 3,444 10.0 34.4 52.4
Net cash End-23CL* 5,126 5.1 7.8
Total 95.2 145
Source: CLSA. * - we assume 2018, 2019, 2020 and 2021 convertible instruments are fully converted. Diluted share count is assumed to be 657m

Figure 34

Valuation sensitivity to Shopee and Garena multiple assumptions

Garena 24CL PE on adjusted net earnings
10.0x 12.0x 14.0x 16.0x 18.0x
2.0x 104 106 107 108 109
2.5x 114 115 116 118 119
3.0x 124 125 126 127 128
3.5x 133 134 135 137 138
Shopee 24CL P/Sales 4.0x 143 144 145 146 147
4.5x 152 153 155 156 157
5.0x 162 163 164 165 166
5.5x 171 173 174 175 176
6.0x 181 182 183 184 186
Source: CLSA

Figure 35

Valuation summary by business line at our target price

Source: CLSA

7 November 2023 [email protected] 15

     
 Growth of E-sports in Asean Asean E-sports

Figure 36

Gaming peers are trading at Gaming peers PE comparison

an FY25CL PE average of
20.2x. We assume Garena’s
valuation at 14x on a
FY25CL PE

Source: CLSA, Bloomberg, Evaluator

Valuation details - Sea Limited SE US

Our SOTP-based valuation comprises Garena, Shopee, SeaMoney and 22A net cash.
We value Garena based on 14x 25CL PE, a c30% discount to the gaming developer
universe, and Shopee on a 25CL P/Sales multiple of 4.0x, which we deem fair
versus global competitors as growth expectations are far higher, and we believe
that Shopee will be a winner in the Asean ecommerce space. We value SeaMoney,
the digital financial services business, on 10x 27CL P/Sales, discounted back to
FY22 at a 13.6% WACC.

Investment risks - Sea Limited SE US

Slowdown in the ecommerce business if consumer confidence is weak with rising
interest rates and high inflation. Sea Ltd faces different competitors in each of its
business lines. Online gaming is a inherently low-visibility segment due to rapid
changes in user tastes, development of new technologies and competition from
other games studios. Success of new games in Garena's pipeline and games updates
are not guaranteed. Southeast Asia ecommerce, especially in Indonesia, is
competitive but Shopee has more than established itself as amongst the leading
five players in the region over the past five years. The risks: A change of tax
structure to include small merchants in its key Asean markets may also hinder
growth. Also, similar to Chinese internet companies, Sea Ltd operates under
foreign-ownership restrictions and a variable-interest-entity structure and has a
dual-class shareholding structure.

7 November 2023 [email protected] 16

     
 Important disclosures Asean E-sports

Research subscriptions
To change your report distribution requirements, please contact your CLSA sales representative or email us at [email protected].
You can also fine-tune your Research Alert email preferences at https://www.clsa.com/member/tools/email_alert/.

Companies mentioned
Activision (N-R)
Apple (N-R)
AS (N-R)
Asphere Innovations (N-R)
Bandai Namco (7832 JP - ¥3,251 - O-PF)
BeLive Technology (N-R)
Capcom (9697 JP - ¥5,099 - O-PF)
CD Projekt (N-R)
Century Huatong (N-R)
Electronic Arts (N-R)
Embracer (N-R)
Garena (N-R)
G-Bits (N-R)
Giant Network Group (N-R)
Global Star Acquisition Inc. (N-R)
JOYY Inc (YY US - US$41.70 - BUY)
Kitty Live (N-R)
Koei Tecmo (N-R)
Level Infinite (N-R)
Moonton (N-R)
NCsoft (036570 KS - ₩259,000 - U-PF)
NetEase (NTES US - US$112.72 - BUY)
Netmarble (N-R)
Newzoo (N-R)
Nexon (3659 JP - ¥2,834 - BUY)
NHN Entertainment (N-R)
Nintendo (7974 JP - ¥6,432 - SELL)
Pearl Abyss (N-R)
PerfectWorld (N-R)
Riot Games (N-R)
Sea Limited (SE US - US$44.79 - BUY)
SeaMoney (N-R)
Sensor Tower (N-R)
Shopee (N-R)
Smilegate (N-R)
Square Enix (9684 JP - ¥5,128 - BUY)
Statista (N-R)
Take-Two (N-R)
Tencent (700 HK - HK$312.60 - BUY)
Twitch Interactive (N-R)
Ubisoft (N-R)
Valve (N-R)
Wicked Interactive (N-R)
Wuhu Shunrong (N-R)
YouTube (N-R)
Zynga (N-R)

7 November 2023 [email protected] 17

     
 Important disclosures Asean E-sports

Analyst certification
The analyst(s) of this report hereby certify that the views expressed in this research report accurately reflect my/our
own personal views about the securities and/or the issuers and that no part of my/our compensation was, is, or will
be directly or indirectly related to the specific recommendation or views contained in this research report.

Important disclosures
Recommendation history of Sea Limited SE US

Date Rec Target Date Rec Target

16 Aug 2023 BUY 145.00 15 Mar 2021 O-PF 275.00
20 May 2022 BUY 159.00 03 Mar 2021 O-PF 295.00
03 Mar 2022 BUY 289.00 08 Feb 2021 O-PF 285.00
18 Nov 2021 BUY 455.00 07 Dec 2020 O-PF 220.00
19 Aug 2021 O-PF 352.00 18 Nov 2020 BUY 214.00
19 May 2021 BUY 285.00 10 Nov 2020 BUY 218.00
29 Mar 2021 BUY 275.00
Source: CLSA

CLSA (“CLSA”) in this report refers to CLSA Limited, CLSA Americas, listed in the relevant jurisdiction(s) at the time of publication of this
LLC, CLSA Australia Pty Ltd, CLSA India Private Limited, PT CLSA report. (For full disclosure of interest for all companies covered by
Sekuritas Indonesia, CLSA Securities Japan Co., Ltd., CLSA Securities CLSA in this report, please refer to
Korea Ltd., CLSA Securities Malaysia Sdn. Bhd., CLSA Philippines, Inc, http://www.clsa.com/member/research_disclosures/ for details.)
CLSA Singapore Pte Ltd, CLSA Securities (Thailand) Limited, CLSA As analyst(s) of this report, I/we hereby certify that the views
(UK), CLSA Europe B.V. and/or their respective affiliates. CLST expressed in this research report accurately reflect my/our own
(“CLST”) in this report refers to CL Securities Taiwan Co., Ltd. personal views about the securities and/or the issuers and that no
The policies of CLSA and CLST are to only publish research that is part of my/our compensation was, is, or will be directly or indirectly
impartial, independent, clear, fair, and not misleading. Regulations or related to the specific recommendation or views contained in this
market practice of some jurisdictions/markets prescribe certain report or to any investment banking relationship with the subject
disclosures to be made for certain actual, potential or perceived company covered in this report (for the past one year) or otherwise
conflicts of interests relating to a research report as below. This any other relationship with such company which leads to receipt of
research disclosure should be read in conjunction with the research fees from the company except in ordinary course of business of the
disclaimer as set out hereof and at www.clsa.com/disclaimer.html, the company. The analyst/s also state/s and confirm/s that he/she/they
Terms and Conditions of Use as set out at has/have not been placed under any undue influence, intervention or
https://www.clsa.com/terms-and-conditions-of-use/ and the pressure by any person/s in compiling this research report. In
applicable regulation of the concerned market where the analyst is addition, the analysts included herein attest that they were not in
stationed and hence subject to. Investors are strongly encouraged to possession of any material, non-public information regarding the
review this disclaimer before investing. subject company that has securities listed in the relevant
Neither analysts nor their household members or associates may jurisdiction(s) at the time of publication of this report. The analysts
have a financial interest in, or be an officer, director or advisory board further confirm that none of the information used in this report was
member of companies covered by the analyst unless disclosed herein. received from CLSA's Corporate Finance department or CLSA's
In circumstances where an analyst has a pre-existing holding in any and/or CLST's Sales and Trading business. Save from the disclosure
securities under coverage, those holdings are grandfathered and the below (if any), the analyst(s) is/are not aware of any material conflict
analyst is prohibited from trading such securities. of interest.
The analysts included herein hereby confirm that they have not For the companies under research coverage, CLSA and/or CLST
been placed under any undue influence, intervention or pressure by expect(s) to receive or intend(s) to seek compensation for investment
any person/s in compiling this research report. In addition, the banking services from Sea Limited in the next three months.
analysts attest that they were not in possession of any material, non- Key to CLSA/CLST investment rankings: BUY: Total stock return
public information regarding the subject company that has securities (including dividends) expected to exceed 20%; O-PF (aka

7 November 2023 [email protected] 18

     
 Important disclosures Asean E-sports

ACCUMULATE): Total expected return below 20% but exceeding and are subject to change at any time without notice. Where any part
market return; U-PF (aka REDUCE): Total expected return positive but of the information, opinions or estimates contained herein reflects the
below market return; SELL: Total return expected to be negative. For views and opinions of a sales person or a non-analyst, such views and
relative performance, we benchmark the 12-month total forecast opinions may not correspond to the published view of CLSA and/or
return (including dividends) for the stock against the 12-month CLST. Any price target given in the report may be projected from one
forecast return (including dividends) for the market on which the or more valuation models and hence any price target may be subject
stock trades. to the inherent risk of the selected model as well as other external
"High Conviction" Ideas are not necessarily stocks with the most risk factors. Where the publication does not contain ratings, the
upside/downside, but those where the Research Head/Strategist material should not be construed as research but is offered as factual
believes there is the highest likelihood of positive/negative returns. commentary. It is not intended to, nor should it be used to form an
The list for each market is monitored weekly. investment opinion about the non-rated companies.
Overall rating distribution for CLSA (exclude CLST) only Universe: This report is for information purposes only and it does not
Overall rating distribution: BUY / Outperform - CLSA: 73.47%, constitute or contain, and should not be considered as an offer or
Underperform / SELL - CLSA: 26.53%, Restricted - CLSA: 0.00%; Data invitation to sell, or any solicitation or invitation of any offer to
as of 1 Oct 2023. Investment banking clients as a % of rating category: subscribe for or purchase any securities in any jurisdiction and
BUY / Outperform - CLSA: 13.51%, Underperform / SELL - CLSA: recipient of this report must make its own independent decisions
2.93%; Restricted - CLSA: 0.00%. Data for 12-month period ending 1 regarding any securities or financial instruments mentioned herein.
Oct 2023. This is not intended to provide professional, investment or any other
Overall rating distribution for CLST only Universe: Overall rating type of advice or recommendation and does not take into account the
distribution: BUY / Outperform - CLST: 65.45%, Underperform / SELL particular investment objectives, financial situation or needs of
- CLST: 34.55%, Restricted - CLST: 0.00%. Data as of 1 Oct 2023. individual recipients. Before acting on any information in this report,
Investment banking clients as a % of rating category: BUY / you should consider whether it is suitable for your particular
Outperform - CLST: 0.00%, Underperform / SELL - CLST: 0.00%, circumstances and, if appropriate, seek professional advice, including
Restricted - CLST: 0.00%. Data for 12-month period ending 1 Oct legal or tax advice. Investments involve risks, and investors should
2023. exercise prudence and their own judgment in making their investment
There are no numbers for Hold/Neutral as CLSA/CLST do not decisions. The value of any investment or income may go down as
have such investment rankings. For a history of the recommendation, well as up, and investors may not get back the full (or any) amount
price targets and disclosure information for companies mentioned in invested. Investments that are denominated in foreign currencies may
this report please write to: CLSA Group Compliance, 18/F, One Pacific fluctuate in value as a result of exposure to movements of exchange
Place, 88 Queensway, Hong Kong and/or; CLST Compliance (27/F, rate. Past performance is not necessarily a guide to future
95, Section 2 Dun Hua South Road, Taipei 10682, Taiwan, telephone performance or liquidity. CLSA and/or CLST do/does not accept any
(886) 2 2326 8188). EVA® is a registered trademark of Stern, Stewart responsibility and cannot be held liable for any person’s use of or
& Co. "CL" in charts and tables stands for CLSA estimates, “CT” stands reliance on the information and opinions contained herein. To the
for CLST estimates, "CRR" stands for CRR Research estimates and extent permitted by applicable securities laws and regulations, CLSA
“CS” for Citic Securities estimates unless otherwise noted in the and/or CLST accept(s) no liability whatsoever for any direct or
source. consequential loss arising from the use of this report or its contents.
Charts and tables sourced to CLSA in this report may include data To maintain the independence and integrity of our research, our
extracted from CLSA’s automated databases, which derive their Corporate Finance, Sales Trading, Asset Management and Research
original data from a range of sources. These can include: companies; business lines are distinct from one another. This means that CLSA’s
analyst estimates/calculations; local exchanges and/or third-party Research department is not part of and does not report to CLSA's
data or market pricing providers such as Bloomberg, FactSet or IBES. Corporate Finance department or CLSA’s Sales and Trading business.
Additional information on data sources for specific charts or tables Accordingly, neither the Corporate Finance department nor the Sales
can be obtained by contacting the publishing analysts. and Trading department supervises or controls the activities of CLSA’s
This report is subject to and incorporates the terms and conditions research analysts. CLSA’s research analysts report to the management
of use set out on the www.clsa.com website of the Research department, who in turn report to CLSA’s senior
(https://www.clsa.com/disclaimer.html and management. CLSA has put in place a number of internal controls
https://www.clsa.com/terms -and-conditions-of use/) and the designed to manage conflicts of interest that may arise as a result of
references to “publication/communication” or “Publications” thereof CLSA engaging in Corporate Finance, Sales and Trading, Asset
shall include this report. Neither this report nor any portion hereof Management and Research activities. Some examples of these
may be reprinted, sold, resold, copied, reproduced, distributed, controls include: the use of information barriers and other controls
redistributed, published, republished, displayed, posted or designed to ensure that confidential information is only shared on a
transmitted in any form or media or by any means without the written “need to know” basis and in compliance with CLSA’s Chinese Wall
consent of CLSA and/or CLST. CLSA and/or CLST has/have produced policies and procedures; measures designed to ensure that
this report for private circulation to professional, institutional and/or interactions that may occur among CLSA’s Research personnel,
wholesale clients only, and may not be distributed to retail investors. Corporate Finance, Asset Management, and Sales and Trading
The information, opinions and estimates herein are not directed at, or personnel, CLSA’s financial product issuers and CLSA’s research
intended for distribution to or use by, any person or entity in any analysts do not compromise the integrity and independence of CLSA’s
jurisdiction where doing so would be contrary to law or regulation or research.
which would subject CLSA and/or CLST to any additional registration Subject to any applicable laws and regulations at any given time,
or licensing requirement within such jurisdiction. The information and CLSA, CLST, their respective affiliates, officers, directors or
statistical data (for private or public companies) herein have been employees may have used the information contained herein before
obtained from sources we believe to be reliable. Such information has publication and may have positions in, or may from time to time
not been independently verified and CLSA and/or CLST makes no purchase or sell or have a material interest in any of the securities
representation or warranty as to its fairness, adequacy, accuracy, mentioned or related securities, or may currently or in future have or
completeness or correctness. The replication of any third party views have had a business or financial relationship with, or may provide or
in this report should not be treated necessarily as an indication that have provided corporate finance/capital markets and/or other
CLSA and/or CLST agrees with or concurs with such views. None of services to, the entities referred to herein, their advisors and/or any
CLSA and/or CLST, its affiliates and their respective directors, other connected parties. As a result, you should be aware that CLSA
officers, employees, advisers and representatives makes any and/or CLST and/or their respective affiliates, officers, directors or
representation or warranty, express or implied, as to and no reliance employees may have one or more conflicts of interest. Regulations or
should be placed on, the fairness, accuracy, completeness or market practice of some jurisdictions/markets prescribe certain
correctness of such data or information contained herein or any disclosures to be made for certain actual, potential or perceived
statement made in this report. Any opinions or estimates herein conflicts of interests relating to research reports. Details of the
reflect the judgment of CLSA and/or CLST at the date of this report disclosable interest can be found in certain reports as required by the

7 November 2023 [email protected] 19

     
 Important disclosures Asean E-sports

relevant rules and regulation and the full details of conflict of interest months, may have received compensation for non-investment
with companies under coverage are available at banking services and/or non-securities related services from the
http://www.clsa.com/member/research_disclosures/. Disclosures subject company. For further details of “associates” of CLSA India
therein include the position of CLSA and CLST only. Unless specified please contact [email protected]. Registration granted by
otherwise, CLSA did not receive any compensation or other benefits SEBI and certification from NISM in no way guarantee performance
from the subject company, covered in this report, or from any third of CLSA India Private Limited or provide any assurance of returns to
party. If investors have any difficulty accessing this website, please investors. Compliance officer & Grievance officer: Neeta Sanghavi,
contact [email protected]. If you require disclosure information on Tel: 22 6650 5050. Email address of Compliance officer and
previous dates, please contact [email protected]. Grievance cell: [email protected].
Any disputes related to this report shall be governed by the laws Singapore: This report is distributed in Singapore by CLSA
of Hong Kong and to the non-exclusive jurisdiction of the courts of Singapore Pte Ltd to institutional investors, accredited investors or
Hong Kong in connection with any suite, action or proceeding arising expert investors (each as defined under the Financial Advisers
out of or in connection with this material. In the event any of the Regulations) only. Singapore recipients should contact CLSA
provisions in these Terms of Use shall be held to be unenforceable, Singapore Pte Ltd, 80 Raffles Place, #18-01, UOB Plaza 1, Singapore
that provision shall be enforced to the maximum extent permissible 048624, Tel: +65 6416 7888, in respect of any matters arising from,
to reflect the intention underlying the unenforceable term, and the or in connection with, the analysis or report. By virtue of your status
remainder of these General Disclaimer shall be unimpaired. as an institutional investor, accredited investor or expert investor,
This report is distributed for and on behalf of CLSA (for research CLSA Singapore Pte Ltd is exempted from complying with certain
compiled by non-US and non-Taiwan analyst(s)), CLSA Americas, LLC requirements under the Financial Advisers Act 2001, the Financial
(for research compiled by US analyst(s)) and/or CLST (for research Advisers Regulations and the relevant Notices and Guidelines issued
compiled by Taiwan analyst(s)) in Australia by CLSA Australia Pty Ltd thereunder (as disclosed in Part C of the Securities Dealing Services –
(ABN 53 139 992 331/AFSL License No: 350159); in Hong Kong by Singapore Annex of the CLSA terms of business), in respect of any
CLSA Limited (Incorporated in Hong Kong with limited liability); in financial advisory services that CLSA Singapore Pte Ltd may provide
India by CLSA India Private Limited, (Address: 8/F, Dalamal House, to you. MCI (P) 042/11/2022.
Nariman Point, Mumbai 400021. Tel No: +91-22-66505050. Fax No: United States of America: Where any section of the research is
+91-22-22840271; CIN: U67120MH1994PLC083118; SEBI compiled by US analyst(s), it is distributed by CLSA Americas, LLC.
Registration No: INZ000001735 as Stock Broker, INM000010619 as Where any section is compiled by non-US analyst(s), it is distributed
Merchant Banker and INH000001113 as Research Analyst; in into the United States by CLSA (except CLSA Americas, LLC) solely to
Indonesia by PT CLSA Sekuritas Indonesia; in Japan by CLSA persons who qualify as "Major US Institutional Investors" as defined
Securities Japan Co., Ltd.; in Korea by CLSA Securities Korea Ltd.; in in Rule 15a-6 under the Securities and Exchange Act of 1934 and who
Malaysia by CLSA Securities Malaysia Sdn. Bhd.; in the Philippines by deal with CLSA Americas, LLC. However, the delivery of this research
CLSA Philippines Inc (a member of Philippine Stock Exchange and report to any person in the United States shall not be deemed a
Securities Investors Protection Fund); in Singapore by CLSA recommendation to effect any transactions in the securities discussed
Singapore Pte Ltd and solely to persons who qualify as an herein or an endorsement of any opinion expressed herein. Any
"Institutional Investor", "Accredited Investor" or "Expert Investor" recipient of this research in the United States wishing to effect a
MCI (P) 042/11/2022; in Thailand by CLSA Securities (Thailand) transaction in any security mentioned herein should do so by
Limited; in Taiwan by CLST (for reports compiled by Taiwan analyst(s) contacting CLSA Americas, LLC.
or CLSA (for non Taiwan stock reports to CLSA clients) and in the The United Kingdom: This document is a marketing
European Economic Area (‘EEA”) by CLSA Europe BV and in the communication. It has not been prepared in accordance with the legal
United Kingdom by CLSA (UK). requirements designed to promote the independence of investment
Hong Kong: This research report is distributed by CLSA Limited. research, and is not subject to any prohibition on dealing ahead of the
This research report is distributed in Hong Kong only to professional dissemination of investment research. The document is disseminated
investors (as defined in the Securities and Futures Ordinance (Chapter in the UK by CLSA (UK) and directed at persons having professional
571 of the Laws of Hong Kong) and any rules promulgated experience in matters relating to investments, as defined in the
thereunder) and may not be distributed to retail investors. Recipients relevant applicable local regulations. Any investment activity to which
should contact CLSA Limited, Tel: +852 2600 8888 in respect of any it relates is only available to such persons. If you do not have
matters arising from, or in connection with, the analysis or report. professional experience in matters relating to investments you should
Australia: CLSA Australia Pty Ltd (“CAPL”) (ABN 53 139 992 not rely on this document. Where research material is compiled by UK
331/AFS License No: 350159) is regulated by the Australian analyst(s), it is produced and disseminated by CLSA (UK). For the
Securities and Investments Commission (“ASIC”) and is a Market purposes of the Financial Conduct Rules in the UK such material is
Participant of ASX Limited and Cboe Australia Pty Ltd. . This material prepared and intended as substantive research material. CLSA (UK) is
is issued and distributed by CAPL in Australia to "wholesale clients" authorised and regulated by the Financial Conduct Authority.
only. This material does not take into account the specific investment The European Economic Area (‘EEA”): research is distributed by
objectives, financial situation or particular needs of the recipient. The CLSA Europe BV, authorised and regulated by the Netherlands
recipient of this material must not distribute it to any third party Authority for Financial Markets.
without the prior written consent of CAPL. For the purposes of this CLSA Securities Malaysia Sdn. Bhd (CLSA Malaysia)’s research
paragraph the term "wholesale client" has the meaning given in coverage universe spans listed securities across the FBM KLCI Index,
section 761G of the Corporations Act 2001. CAPL’s research securities listed on offshore markets, unlisted issuers and investment
coverage universe spans listed securities across the ASX All products which Research management deem to be relevant to the
Ordinaries index, securities listed on offshore markets, unlisted investor base from time to time. CLSA Malaysia seeks to cover
issuers and investment products which Research management deem companies of relevance to its domestic and international investor
to be relevant to the investor base from time to time. CAPL seeks to base across a variety of sectors.
cover companies of relevance to its domestic and international For all other jurisdiction-specific disclaimers please refer to
investor base across a variety of sectors. https://www.clsa.com/disclaimer.html. The analysts/contributors to
India: CLSA India Private Limited, incorporated in November 1994 this report may be employed by any relevant CLSA entity or CLST,
provides equity brokerage services (SEBI Registration No: which is different from the entity that distributes the report in the
INZ000001735), research services (SEBI Registration No: respective jurisdictions.© 2023 CLSA and/or CL Securities Taiwan
INH000001113) and merchant banking services (SEBI Registration Co., Ltd. (“CLST”).
No.INM000010619) to global institutional investors, pension funds Investment in securities market are subject to market
and corporates. CLSA and its associates may have debt holdings in the risks. Read all the related documents carefully before
subject company. Further, CLSA and its associates, in the past 12 investing.

7 November 2023 [email protected] 20