Sea's market value is approaching that of the Star Group, and the battle for the throne of Southeast Asia's leading company is reigniting.

The soaring sales of Southeast Asian internet giant Sea (SE.US) are poised to reclaim the title of the most valuable company in Southeast Asia. The 19% surge in its stock price on Tuesday pushed its market value close to DBS Group Holdings Ltd. The e-commerce company is currently valued at $103 billion, while the regional banking giant DBS Group is valued at $113 billion. Sea's sales figures announced on Tuesday exceeded expectations, as Southeast Asian consumers are increasingly turning to online shopping for everything from buying iPhones to daily groceries. This performance alleviated some concerns in the market about the prospects of its core e-commerce business, Shopee. The region's top online retail platform is competing with well-funded global competitors such as TikTok Shop by ByteDance and Lazada by Alibaba Group Holding Limited Sponsored ADR. Emerging companies like SHEIN and PDD Holdings Inc. Sponsored ADR Class A's Temu are also trying to enter this emerging market with a population of 675 million people, as more and more consumers in the region are going online. Citigroup analyst Alicia Yap pointed out in a report that the performance "helps alleviate earlier concerns about intensifying competition", and Sea demonstrates "positive improvements in user conversion rates, purchase frequency, average order value, merchant advertising willingness, as well as the thriving development of live streaming and short video content ecology". Revenue for the three months ending in June grew 38% to a record $5.26 billion, exceeding analysts' average estimate of $5 billion. Sea's stock price saw its largest increase in over two years, closing at its highest level since the beginning of 2022. To attract users, Sea is focusing on enhancing the customer experience through its self-built logistics network SPX Express. This initiative drove a nearly 30% increase in total e-commerce orders and total merchandise transactions in the latest quarter. Currently, SPX handles delivery for the majority of the several billion parcels shipped by Shopee annually. CFRA Research analyst Jian Xiong Lim stated, "We expect Sea's robust competitive advantages to continue supporting profit growth," including its "well-developed delivery network and logistics facilities." To improve profitability, Shopee has gradually raised merchant commissions in core markets by about a third since the beginning of last year. These rate adjustments higher than those of competitors indicate that Sea, with a large user base and mature delivery services, is confident in attracting and retaining merchants. Shopee's revenue in the second quarter grew 34% to $3.8 billion, partly due to a sharp increase in commission and advertising revenue. Sea is also betting on new initiatives like digital finance to solidify its advantage and demonstrate growth potential to investors. Its financial business (now called Monee) saw sales increase by 70% to $882.8 million in the last quarter, while the gaming division Garena saw revenue increase by 23%. Malaysia Securities analyst Hussaini Saifee pointed out before the earnings report, "Sea has used cash flow from the gaming division Garena to develop Shopee and Monee in the past, and now with both in a healthier financial position, the company can reinvest to revitalize Garena - a business that has shown strong recovery in the past year and a half." Analysts Lea El-Hage and Nathan Naidu predict, "Strong growth across all three businesses will drive Sea's net profit to double by 2025. Based on strong momentum in the first half of the year and continued growth in the third quarter, Shopee's total merchandise transactions may exceed the 20% growth target. Advertising technology improvements driving increased merchant advertising quantity and average spending may further improve monetization rates. Scale effects (especially in Brazil) will reduce average costs per order, enhance overall profitability of e-commerce, and self-owned logistics remains a key competitive advantage."