2022 Guidance points to much slower Fintech and Delivery growth
- 4Q21 adjusted net sales of US$706m (+15% q-o-q) was inline but adj. EBITDA loss of (US$305m) exceeded our loss of (US$235m), mainly due to the Delivery segment.
- Grab’s 2022 GMV guidance is in line with our estimates but 15-20% below its previous official guidance. Shifts EBITDA breakeven for Delivery to 2023 (prev 2022), inline with our estimates.
- Maintain HOLD with unrevised TP of US$5.60 translating to 5x FY22F adj. net sales.
4Q21 Delivery adjusted EBITDA took a hit. Delivery GMV of US$2.4bn (+4% q-o-q) with sequentially stable take rate of 18% was inline but adjusted EBITDA loss of (US84m) was worse than expected loss of (US$26m). This could be due to severe competition in Indonesia led by Shopee delivery service who secured 8% share in less than 9-month of its launch.
4Q21 Mobility performed inline with GMV gains neutralized by higher driver incentives. Mobility GMV rose by 45% q-o-q to U$765m vs our US$658m estimate, on the back of economy re-openings. Adj EBITDA of US$76m vs US$64m in 3Q21 was inline with our US$81m estimate.
Fintech business did not grow much. In terms of Pre-InterCo transaction processing volume (TPV) for Q4 was US$3.4 bn, (+8% q-o-q). Adjusted EBITDA loss of (US$110m) vs (US$76m) loss in 3Q21 was inline.
Grab 4Q21 segmental results
2022 GMV guidance implies much slower Fintech growth. Following is the guidance for 1Q22, which translates to a stable GMV on a sequential basis and 25% growth on an annual basis.
- Deliveries GMV to be between US$2.4-2.5bn, stable sequentially.
- Mobility GMV to be between US$0.75-0.80 billion, stable sequentially.
- Financial Services Pre-InterCo TPV to be between US$3.1- 3.2bn, down 6-7% q-o-q.
Grab further expects GMV growth for each of the quarters from Q2 to Q4 2022 to accelerate to 30 – 35% YoY, subject to shifts in the COVID-19 environment.
Overall, mid-point of the guidance translates into 31% GMV growth in 2022, in line with our estimates but below its previous guidance of 38% growth. This variance can be explained by (i) much slower Fintech growth due to potential loss of very sizable player – Tokopedia as a customer in Indonesia, which the company is trying to offset with new partners such as Lazada & Bukalapak and,(ii) Intense market share competition in the Delivery segment led by Shopee who gained 8% market share in Indonesia in just 9-months of its launch and may at least double its market share in 2022 in our view.
Grab projects Delivery segment adjusted EBITDA breakeven in 2023 (prev 2022), in line with our estimates. Grab is progressing towards core food delivery Segment Adjusted EBITDA breakeven by the first half of 2023 and deliveries Segment Adjusted EBITDA to breakeven by the end of 2023. Overall, we don’t expect EBITDA losses to narrow in 2022.