Maybank Slashes Sea Limited's FY26-27 EBITDA Forecasts by 8-10% Amid Investment-Driven Margin Pressures

Maybank Investment Bank has reduced its adjusted EBITDA estimates for Sea Limited for FY26 and FY27 by 8 to 10 percent due to lower margin assumptions.

The downgrade reflects pressures from calibrated investments aimed at strengthening long-term competitive moats across Sea's businesses.

Reasons for the EBITDA Cut

Sea Limited experienced softening EBITDA margins in Q4 2025, with quarterly results 6 percent below consensus, primarily from upfront operating expenditures.

Key investments include Shopee's Phase 2 logistics expansion for same/next-day delivery, targeting doubled or tripled fulfilment penetration by end-FY26.

Sea Limited's Recent Performance and History

In 2025, Sea Limited's revenue grew 36.4 percent year-on-year, driven by 28 percent GMV expansion at Shopee and 80 percent loan book growth at SeaMoney.

Garena delivered blockbuster results, guiding for high single- to double-digit growth into 2026 and Free Fire's 10th anniversary in 2027.

Unlike FY23-24 losses, Sea now pursues growth with disciplined profit guardrails and a strong balance sheet.

Future Outlook and Potential Impacts

Management expects visible returns on investments by Q4 2026, resetting margins toward a 2-3 percent long-term target for Shopee.

Maybank forecasts Sea's overall adjusted EBITDA to grow at a 42 percent CAGR through FY27, with revenue at 25 percent CAGR.

Upsides include accelerated user growth and share buybacks, while risks encompass weaker regional consumer spending and rising competition.

The firm's logistics moat and rational competitive landscape in Southeast Asia position it resiliently against disruptors like TikTok.