Maybank Investment Bank has lowered 2025 to 2027 estimated earnings for Singapore-based technology firm Sea by 8 percent to 24 percent on softer margin assumptions across key segments.

“With Shopee pursuing a more growth-oriented strategy amid slight competitive pressures, we expect margin improvement to slow,” the research house said in a note on Friday.

Maybank forecasts Shopee adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA)-to-gross merchandise value (GMV) margins to decline 20 basis points (bps) in the second half (versus first half) and improve by only about 30 bps per year in 2026 to 2027.

In Shopee, it noted its medium-term EBITDA expansion is constrained as Sea voluntarily reinvests monetization gains to expand the TAM through incentives-efficiencies, and potentially small-scale new market testing, resulting in FY26 margins closer to about 1 percent versus the street’s 1.2 percent to 1.3 percent expectations.

It also expects Shopee’s GMV growth for 1H25 to 2027 at a compound annual growth rate (CAGR) of 22 percent (versus 20 percent previously).

Its Shopee GMV estimates are 1 percent to 8 percent ahead of street estimates for 2025 to 2027.

“We also see a part of monetization gains are reinvested to fend off competition in Brazil and ASEAN,” it added.

According to the research house, competitive intensity has risen, particularly in Brazil, where Mercado Libre has lowered commission rates and reduced its free-shipping threshold, while Amazon (with less than 10 percent market share) has also cut seller commissions — both moves posing incremental pressure on Shopee.

It is noted that in ASEAN, competition remains broadly stable, though TikTok continues to stay aggressive.

While Lazada remains a market share donor, Maybank highlighted that Taobao’s renewed cross-border push presents an emerging risk.

“Factoring in these competitive dynamics, we believe Sea is prudently embedding guardrails within its indicated bear-case margin assumptions,” it said.

Maybank also estimated Monee (DFS) margins to fall 170 bps over two years due to lower interest yields and higher sales and marketing (S&M) spend, while Garena margins face pressure from growth investments.

According to the research house, Monee margins could moderate to mid-20s (30 percent in the first half) due to lower interest yields from geographic mix, first month 0 percent introductory loans, elevated S&M spend, and mechanical provision ratio effects.

“These trends reflect management’s deliberate reinvestment strategy to broaden ecosystem reach and sustain long-term growth, rather than any deterioration in business fundamentals,” it said.

However, it thinks the Monee business remains firmly growth-oriented, with loan expansion expected to stay robust at more than 50 percent year on year, underpinned by
healthy credit metrics and expanding penetration beyond the Shopee ecosystem.

“We trim our Monee adjusted EBITDA estimates for 2025 to 2027 by 4 percent,

“Our Monee adjusted EBITDA estimates for 2025 to 2027 are 6 percent to 15 percent below street,” it added.

Meanwhile, Garena margins could normalize to the mid-50s (58 percent in the first half), weighed by investments in new game development, IP collaboration fees, and regional e-sports, reflecting deliberate trade-off between growth and medium-term profitability, according to Maybank.

However, it opined that the company has renewed its focus on Garena growth targeting consistent double-digit bookings growth trajectory driven by user expansion, new game launches, and deeper monetization across its portfolio.

“We raise our bookings estimates for 2025 to 2027 by 2 percent to 7 percent but lower adjusted EBITDA estimates by 0 percent to 7 percent as higher growth spending to weigh on margins,” it added.

Maybank, however, expects Sea’s third quarter results (due mid November) to deliver solid topline growth, led by Garena’s strong content line-up, including Free Fire collaborations with Naruto and Squid Game.

According to the research house, Shopee’s GMV should grow 26 percent year on year (6 percent quarter on quarter), but a 6 bps margin decline is likely to drive a 3 percent drop in adjusted EBITDA as management prioritizes growth investments.

“Monee margins are expected to compress amid higher S&M spending, bigger growth in lower interest rate markets and higher provision ratios,

“Net income could face temporary pressure from revenue deferrals, with the effective tax rate elevated at 35 percent to 40 percent,” it said.

Maybank sees minimal impact from Sea’s Shopee seller commission raise