Highlights

• 1H26 revenue of US$14.9b (+47% yoy) was better than expected, representing 60% of our forecast, driven by all business segments.
   

• Shopee’s take rate rose to about 14.6%, Monee's loan book grew to US$11.1b (+62.5% yoy), and Garena bookings normalised to US$763.5m.
   

• Maintain BUY with an unchanged target price of US$181.18, after rolling our valuation base to 2027F and factoring in a re-rating.
   

Analysis

• Revenue beat, earnings in line. SEA reported 2Q26 revenue of US$7.8b (+48% yoy), with all three segments contributing to the upside. PATMI of US$441m (+9% yoy) lagged the revenue beat but remains in line with expectations. This brought 1H26 revenue to US$14.9b (+47% yoy) and earnings to US$868.7m (+7% yoy), representing 60% and 47% of our forecasts respectively. 1H26 adjusted EBITDA of US$1.95b (+12% yoy) was led largely by Garena on strong bookings and operating leverage in 1H26.
   

• E-commerce (Shopee): Strong GMV and monetisation drive EBITDA guidance upgrade. 2Q26 GMV reached a record US$38.3b (+28% yoy, +3% qoq), while revenue grew 48% yoy to US$5.6b, driven by 66% yoy growth in core marketplace revenue and >70% yoy ad revenue growth. Content-led commerce and faster delivery gained traction. Adjusted EBITDA rose to US$255m (+12% yoy, +15% qoq), reflecting improving scale despite continued logistics investment. Management now expects Shopee to achieve US$1.0b of adjusted EBITDA in 2026, vs its previous guidance of no less than 2025’s US$881m.
   

• Digital financial services (Monee): Credit growth remains strong while asset quality improves. 2Q26 revenue rose 59% yoy and 17% qoq to US$1.4b, while the loan book expanded 63% yoy and 12% qoq to US$11.1b (US$10.0b on-book, US$1.1b off-book), supported by an approximately 34% yoy increase in active credit users to >40m and continued expansion of credit use cases beyond Shopee. NPL ratio improved to 1.0% from 1.1% in 1Q26, despite continued rapid loan book growth, supporting management’s confidence in its risk capabilities. Adjusted EBITDA of US$288m grew 13% yoy and 5% qoq. Management remains confident in Monee’s long-term growth and earnings potential.
   

• Digital entertainment (Garena): 2Q26 normalised from an exceptional 1Q26 but engagement remains healthy. 2Q26 bookings moderated to US$764m (+16% yoy, -18% qoq) following an exceptionally strong 1Q26, while paying users rose 10% yoy to 68.1m and the paying-user ratio improved to 10.2% from 9.3% in 2Q25. Revenue of US$747m (+34% yoy) and adjusted EBITDA of US$430m (+17% yoy) reflected strong operating leverage. Free Fire remained the key earnings anchor with >100m average daily active users, while Garena continued to diversify its portfolio through the recently announced Palworld Online and Monster Hunter Outlanders, both based on strong, globally recognised IP.
   

• 2Q26 results strengthen the bull case across all three segments:
   

  1. Shopee’s EBITDA guidance upgrade signals a better growth profitability balance. The new US$1.0b 2026 adjusted EBITDA target, vs the previous floor of US$881m, suggests that continued investment in logistics and ecosystem growth is becoming less margin-diluted as Shopee scales. Further monetisation gains and improving unit economics remain the key catalysts.
      

  2. Monee's expansion beyond Shopee broadens its growth runway. Management continues to push credit use cases beyond the Shopee ecosystem, which should reduce Monee’s dependence on e-commerce linked lending and expand its addressable market. In our view, a successful execution could increasingly position Monee as a standalone financial-services platform and a larger contributor to group earnings.
      

  3. Garena’s investment case is increasingly about portfolio diversification rather than a Free Fire recovery. With Free Fire having stabilised as a durable core franchise, the next re-rating catalyst is Garena’s ability to build additional meaningful titles around globally recognised IP. The addition of Palworld Online and Monster Hunter Outlanders could reduce reliance on a single franchise and improve the sustainability of Garena’s earnings profile if successfully executed.