Stronger-than-expected revenue guidance; BUY
1Q22 net loss of USD423m (-36% YoY, -60% QoQ) was narrower than our
expectation but in line with the street. FY22E revenue guidance of USD1.2-
1.3b is 15-25% higher than our original forecast – due to stronger-thanexpected GMV growth, higher commission rates, and tapering of
incentives. Reducing our SOTP-based TP to USD4.25 despite higher
segmental valuations due to our lower net-cash forecast. Given mobility’s
stronger profitability vs. deliveries, we see strong mobility recovery as a
catalyst. BUY
Reopening uplift better than expected
Gross merchandise value (GMV) grew 32% YoY to USD4.8b in 1Q22, and
surpassed guidance across the board. From Feb-22 to Apr-22, mobility GMV
rose 32%, which we see as sustained momentum for ride-hailing as
economies reopen. As cross-border traveling resumes, higher value and
margin airport rides have climbed to 6% of mobility GMV. In Mar-22, Grab’s
active driver base was 76% of pre-Covid-19 levels, but Grab remains
confident driver supply will stabilize and incentives will taper in 2H22.
Deliveries showing signs of being a post-Covid habit
Current FY22 revenue guidance implies 85% YoY growth at the midpoint.
According to Grab, revenue growth should still be higher than 50% YoY
excluding Jaya Grocers (acquired Jan-21). Despite economies reopening,
Grab saw stable demand for deliveries and a 6% QoQ decrease in incentives
for customers. Grab sees this as an early sign that delivery demand might
remain stable as ASEAN transitions into post-Covid-19 lifestyles. We are
constructive towards Grab’s foray into grocery delivery, as margins here
(Hello Fresh adjusted EBITDA to GMV: c.11%) tend to be higher than for
food delivery (Uber & DoorDash adjusted EBITDA to GMV c.0.7%).
GXS Bank to launch in SG in 2H22
In Singapore, GXS Bank (digital finance JV with Singtel) will be publicly
launched in 2H22. Overall, Grab appears to have a confident outlook for
GXS Bank, based on on-the-ground observations of demand and supply
dynamics, and remains conscious of not outpricing its services vs.
competitors. Curtailed demand, caused by rising fuel costs, food prices,
or generally weaker consumer sentiment, is a key risk in our view.