By 2040, Asia is expected to contribute 40%+ of global GDP, with over two-thirds of the global middle class located there. Many investors will already have exposure through FTSE 100 shares like HSBC and AstraZeneca (both have growing operations in the East). But for those looking to invest more directly, here’s one growth stock to consider before 31 October.
A three-pronged tech conglomerate
Today, Singapore’s Sea Limited (NYSE:SE) isn’t much known in the West. But it’s already a big deal in Southeast Asia, where it owns the largest e-commerce platform (Shopee). Last year, Shopee’s gross merchandise value (GMV) rose 28% to surpass $100bn.
Sea also owns Garena, a leading online games platform. Garena is the developer and publisher of Free Fire, an incredibly popular mobile battle royale game (100m+ people play it every day). It also hosts esports tournaments around the world.
Finally, there’s Monee (formerly SeaMoney). This is a fintech business, offering loans and various other digital financial services. In Q2, revenue in this unit surged 70% to $883m. It’s also turned profitable, joining the other two divisions.
Stepping back then, Sea is operating across multiple high-growth markets. There’s e-commerce, social shopping (livestreaming), digital entertainment, gaming/esports, digital lending, digital advertising, and more.
Now, the company faces a lot of competition in these areas. For example, Shopee’s market share in Vietnam has reportedly fallen from 68% to 62%, due to intense competition from TikTok Shop. Together, they command around 97% of Vietnam’s e-commerce market.
To combat this rising threat, Shopee is ramping up its own short-video commerce and livestream selling. Ferocious competition is something to consider, though, as it could start weighing on margins.
Growth and valuation
This risk is magnified because Sea isn’t a cheap stock. It’s trading at 5.9 times sales and 43 times forward earnings, indicating that investors are having to pay up to become shareholders.
Nevertheless, it’s hard not to be impressed with Sea’s growth. In Q2, group revenue jumped 38.2% to $5.3bn. Looking ahead, Wall Street expects the top line to swell to roughly $31bn by 2027 (up from $13bn in 2023).
Moreover, operating leverage is starting to kick in. In the first half of 2025, net income attributable to shareholders exploded more than tenfold, from $58m to $809m. The market expects net profit to top $5bn by 2027.
Given this improving profitability, I don’t think the stock is grossly overvalued. Based on the forecasts for 2028, the forward P/E ratio drops to around 25.
Foolish takeaway
As mentioned, Asia is expected to grow tremendously over the next two decades. With Gen Alpha coming of age and the region’s middle class exploding, e-commerce and fintech should be among its biggest winners.
But it’s worth noting that Shopee is also seeing great success in Brazil. Indeed, it has now overtaken regional leader MercadoLibre by order volume in the country. That’s something even Amazon hasn’t been able to do!
Finally, I should point out that Sea’s shares aren’t eligible for an ISA under UK tax rules. However, investors can still buy them through a SIPP or a general investment account.
With the stock still 46% lower than its 2021 peak, I recently took a small position in my SIPP. I’ll look to build this out over time on dips.
