Ryde’s 12-Month Price Target Set at $2, Reflecting Significant Upside Potential - Maxim Group

Ryde Group Ltd., a notable player in the mobility sector, has posted its 1H24 financial results, showcasing a mix of strategic advancements and financial challenges. Despite a year-over-year decline in revenue to S$4.4 million, Ryde exceeded analyst expectations, demonstrating the company's capacity to adapt to changing market dynamics.

A key highlight was the impressive gross margin expansion to 54.9% in 1H24, compared to 29.9% in the same period last year. This significant improvement signals Ryde’s successful efforts to drive higher margins, primarily supported by its transition to a 0% driver commission model, aimed at boosting the supply of drivers and reducing operational costs.

In the first half of 2024, Ryde also executed several strategic initiatives to enhance its business presence and expand its market reach. The company made its debut on the NYSE American in March, raising USD $11.1 million in net proceeds.

By June, Ryde completed secondary listings on the Frankfurt and Stuttgart Stock Exchanges, marking its growing footprint in international markets. Furthermore, it strengthened its ecosystem by partnering with financial services and telehealth companies, aiming to enhance passenger safety and driver welfare. These developments are anticipated to support Ryde’s growth plans for the second half of 2024, with a projected 26% year-over-year increase in revenue.

Looking ahead, Ryde is set on a path of continued expansion in Southeast Asia, targeting untapped markets and new business verticals. As it scales, the company aims to maintain a lean cost structure, potentially supporting transaction volumes up to three times the current levels without significant cost escalation. This operational efficiency could be pivotal as Ryde pursues its target of S$12.9 million in revenue by 2026, with steady gross margin improvement and narrowing losses.

Despite its strategic growth initiatives, Ryde’s current stock price of $0.61 reflects a steep discount compared to its revised 12-month price target of $2. This suggests significant upside potential, with investors recognising Ryde’s scalable structure, regional expansion efforts, and strong balance sheet. The company’s sufficient capital reserves, bolstered by an additional US$4.5 million raised in September 2024, further strengthen its capacity to drive growth and innovation. As one of only a few operators in Singapore’s ride-hailing and carpooling market.

Overall, Ryde's performance and outlook underscore a promising growth trajectory, supported by a robust operational strategy and a clear focus on scaling its business. While challenges remain, the company's innovative measures, strategic partnerships, and favourable market position suggest that Ryde is poised for a meaningful turnaround. Investors may find this a compelling opportunity, considering the significant gap between its current trading price and the target valuation, highlighting Ryde's potential for both growth and value realisation.