Grab Holdings reported it’s 1H23 which beat expectations, the tech company’s adjusted EBITDA narrowed 2Q23 revenue of USD567m and a net loss of USD140m (74% improvement) beating Maybank IB’s and street expectations at 57%/55%, respectively, on a narrower adjusted EBITDA loss of USD20m and reduction in share-based compensation expenses.
The house says it sees easing competition with Grab’s dominance of SEA’s ride-hailing market given its logistical edge over rivals, helping it gain share as social restrictions ease further. Market leadership in online food delivery and continued push to improve unit economics should put Grab on track to break even by 3QFY23E.
Grab’s deliveries segment GMV re-accelerated to USD2.573b in 2Q23 on robust delivery demand as it grew Grab Unlimited subscribers and driver user engagement. Deliveries margins hit an all-time high, with adj. EBTIDA-to-GMV margin at 2.7% underpinned by robust GMV growth and further optimisation of incentives spent. Maybank IB expects Grab’s EBITDA to GMV ratio to widen to 3.0% in FY23E but forecasts a more gradual pace of margin expansion in 2H23E due to its strategic shift back to growth as it nears adj. EBITDA breakeven.
The mobility segment showed sequential GMV and revenue growth in 2Q23, with GMV of USD1.32b (+28% YoY) and revenue of USD208m (+29% YoY) as the region’s active driver supply grew to capture tailwinds from SEA’s tourism recovery. Mobility segment adj.EBITDA as percentage of GMV was 12.4% (+0.3ppts YoY) in 2Q23. Given the continued healthy competitive landscape for on-demand service players in SEA, the house estimates mobility segment will rise to USD677m in FY23E, or 12.7% to GMV ratio, outperforming management’s steady-state margin expectation of 12.0%. But Grab’s FY23E mobility segment focus is more likely skewed towards GMV recovery rather than margin expansion.
Fintech segment loss further narrowed to USD75m (+35% YoY) in 2Q23, helped by improved monetisation and stronger contributions from its credit business with total loan disbursements growing 47% YoY. Grab continues to limit its cash burn for its GrabFin business unit but, in the near term, the house projects build-up of costs for the digital bank which started in FY22.
The house estimates that FY23E loss will remain flattish at USD408m (2% YoY improvement).
