GRAB's Swift Path to Profitability and Market Consolidation – Impressed Analysts Raise Price Target By 50%

Benchmark analyst Fawne Jiang maintained GRAB with a Buy and raised the price target from $4 to $6.

GRAB posted solid results for 2Q23 and revised their full-year guidance positively.

- Profitability Outlook: GRAB now targets breakeven in 3Q23, improving from the previous 4Q23 projection.

- Market Leadership and Margins: GRAB is a market leader and near its steady-state margin goals in core segments, Mobility and Delivery, allowing deeper market penetration and growing market share.

- Sustainability and Growth: Swift profitability transition without market share loss signifies sustainable growth. Promising long-term growth is evident in Mobility, Delivery, Fintech, and advertising sectors.

- Mobility Recovery: Mobility sees a robust recovery, achieving 28% Y/Y GMV growth in 2Q23, driven by increased active users, transactions, and driver supply.

- Delivery Profitability: Delivery records 4% Y/Y GMV growth in 2Q23, suggesting a positive trend likely to push FY23 GMV growth estimate to 5%.

- Fintech Strength: Fintech displays resilience with 223% Y/Y revenue growth and 35% reduction in adjusted EBITDA loss despite a 13% Y/Y GMV drop in 2Q23. Losses are expected to stabilize in 2H23, reducing FY23 EBITDA loss projection to $(284) million.

- Revenue and EBITDA Projections: FY23 revenue estimate rises to $2.30 billion (61% Y/Y growth), with adjusted EBITDA at $(38) million. Focus shifts from sales to profitability, centered on FY24 predictions.

- Long-Term Potential: Capitalizing on ecosystem synergies and market penetration holds long-term potential. GRAB is strategically positioned as a pivotal asset in Southeast Asian portfolios.