To be added to MSCI Singapore ahead of our expectations
- Grab will be added to MSCI Singapore at the close of 28 Feb ahead of our expectations
- Grab is likely to be sixth largest company by market cap
- Maintain BUY call on Grab at unchanged TP of US$9.00; the stock is trading near our bear-case fair value of US$5.60
Grab will be added to MSCI Singapore at the close of 28 Feb ahead of our expectations. Grab will be added to MSCI Singapore with full market cap weightage at the close of 28 Feb 2022. We had expected Grab to be included in the MSCI index in the semi-annual review of May 2022.
Grab is likely to be sixth largest company by market cap. Grab’s current market cap is close to US$21bn. Sea Ltd is the largest company by market cap of US97bn and Sea Ltd’s weightage is likely to rise to 100% in MSCI Singapore index after 28th Feb from 50% earlier. The other four companies with bigger market cap than Grab are the three banks and Singtel.
Grab is trading near our bear-case fair value of US$5.60. Grab is attractive at just 4.3x FY22F adjusted revenue while it was listed at 10x. For comparison, Grab is trading at 33% discount to Sea Ltd at ~6.3x FY22F. Grab is already trading near our bear-case fair value of US$5.60 which assumes only 11% EBITDA margins in the long term vs our base-case of 20% margins.