Grab to explore new growth opportunities although geographical expansion unlikely

Grab will seek for new growth opportunities although a geographical expansion is unlikely as it continues to focus on Southeast Asia, Citi Investment Research analysts Alicia Yap and Nelson Cheung note in their May 26 report.

Citi had recently hosted the Pan-Asian Regional Investor Conference, which was participated by Grab’s head of strategic finance Ken Lek who shared latest business updates.

During the conference, Lek shares that it is possible for Grab to expand its food technology across both online and offline channels through the introduction of dining restaurant deals and other loyalty programmes. This would require deepening relationships with food and grocery merchants.

Grab’s deliveries segment’s adjusted ebitda margin reached 2.6% of gross merchandise value (GMV) in 1QFY2023, mainly driven by significant reduction in consumer promotion spending as the region reopens their border, which led to normalisation of food delivery behaviours.

Meanwhile, in its financial services segment, Grab is expected to launch its digibank in Malaysia and Indonesia in the second half of the year. Currently, the company is undergoing active discussion with regulators to lift the deposit cap, allowing for faster expansion of its loan business.

The company believes that the revenue contribution by its digibanks will be limited in the near-term, targeting to achieve long-term breakeven by 2026.