Southeast Asia has long been overshadowed by China in terms of international investor attention. China is one market, it is the second-largest economy in the world, and the country has grown so fast for so long. In contrast, Southeast Asian economies are much smaller.

The region is made up of many different countries with different political systems (such as Thailand, Singapore, Indonesia, Malaysia, and the Philippines to name just a few), and their economic growth rates haven't been as impressive as China's historically.

Young woman holding a smart phone and credit card.

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Due to the trade tensions between China and the US and economic forces, investor attention is changing and Southeast Asia may be worth a closer look. Given the region's large population (of a combined 740 million) and its relatively low rate of development, many Southeast Asian countries are growing quickly.

In the second quarter, Vietnam's GDP grew 6.7% year-on-year versus China's 6.2% year-on-year growth. On the back of the trade tensions and rising labor costs in China, manufacturing is leaving China and moving toward Southeast Asian countries such as Vietnam.

A Southeast Asian technology giant

The increasing investor attention on Southeast Asia and the region's fast growth rate mean some companies such as SEA Ltd (NYSE:SE), with its significant Southeast Asia exposure, are worth a closer look.

SEA is an internet company with a gaming business along with an e-commerce and payments business. Due to rapid sales growth, SEA shares have done very well in 2019, rising an impressive 176% year-to-date. Can SEA Ltd continue its amazing run?

A diversified business

In terms of what excites investors, SEA's Shopee is on the top of many lists. SEA's Shopee is a leading e-commerce platform that connects buyers with sellers for a wide range of products ranging from home & living to fashion and fitness.

According to a report by iPrice Group, Shopee was one of the most visited e-commerce sites along with Alibaba Group (NYSE:BABA)-backed Lazada in Southeast Asia. In the first quarter of 2019, Shopee had an average of 184.8 million visitors.

Although Alibaba backed Lazada has more resources and arguably more market share than SEA Ltd's e-commerce platform Shopee, there might be room for more than one e-commerce winner. E-commerce has grown a lot in Southeast Asia, by around quadrupling since 2015.

Due to rising incomes, analysts expect the active number of internet users to rise to around 480 million next year, up from 330 million in 2017. As internet penetration and incomes increase, the region's e-commerce market could boom.

In addition to its e-commerce business, SEA also owns a digital entertainment business, Garena, where users access mobile and PC online games that the company curates and localizes. SEA also owns a digital financial services platform, AirPay, that provides small businesses and consumers with e-wallet services.

Reasons to like SEA

Although its e-commerce business isn't profitable, the market is judging SEA on growth, and the company certainly has a lot of that. Total adjusted sales for SEA's second quarter rose 203.1% year-on-year to US$665.4 million and total adjusted e-commerce sales soared 201.7% year-on-year to US$177.4 million. In terms of guidance, management expects adjusted sales for e-commerce of US$720-780 million, up 168.3%-182.1% year-on-year for full-year 2019.

As great as its e-commerce business has done, SEA's digital entertainment business has done even better. Adjusted sales for the division rose 218.6% year-on-year to US$443.2 million, and quarterly active users soared 93.3% year-on-year to 310.5 million. Average sales per user for the second quarter was US$1.40, up from US$0.90 for the second quarter of 2018.

Tencent Holdings (SEHK:700) owns a large stake in SEA Ltd. It could potentially pay more money to buy SEA. Tencent has deep pockets with a market cap of around US$400 billion.

Foolish conclusion

SEA Ltd has done very well in 2019 due to the company's extraordinarily fast growth rate. Given how large the Southeast Asian market will be, the company could continue its run if its growth rate beats expectations and investors don't switch to judging the company on its profits.

A version of this article originally appeared on our Fool Asia site. For more coverage like this head over to Fool.hk.en.