Grab Holdings; Buy, Hold or Sell?

Sunraya
2022-03-24

Grab Holdings Ltd, Q4 2021, Earnings Conference Call/Transcripts Takeaways: (NASDAQ: ‌GRAB‌‌)

Should you buy, hold or sell?‌


Here are my takeways:

1/ Financial Losses

Softbank and Uber getting out of Grab.. (Milking what's left after the SPAC closure).

Just Q4 alone, the loss was $1.1bn, inclusive of paying off investors with convertible shares.



2/ Deliveries

To maintain leading status in online groceries delivery in SEA and accelerate growth in their business.

Speculative growth, will this investment becomes profitable, esp, acquiring majority of 75% of Jaya Grocer. (Spends $350mil to $430mil for the acquisition)

Not to mention, you have Shopee (SE) and Lazada (BABA) in SEA competing for the online groceries delivery market share.


3/ Mobility

Weak moat, with more ride-hailing apps entering at a cutthroat rate. Hence, Grab has to spend more to keep regaining market share in their core moat for mobility.

This section alone, makes me wonder how Grab will progress in the next 5 years (Not remotely confident).


4/ Digibank

Once again, acquiring new business (financial bank) to compete against their competitors (GoTo) for their super-apps services.

Investing in new segment = more money being spent. Just to be clear, GRAB is not profitable as whole in the company!


What could happen in the near future for Grab?‌ Speculating:‌


5/ Dilutions

1. Expect more dilution, why?

As the Grab needs cash to fund their future acquisition and new operating business (Jaya, DigiBank and etc).


6/ Adding more moat/improving their current moat

1. As new obstacles starts to challenge their moat, Grab will have to incentivise or acquire new businesses to establish themselves as a leading brand in market share.resulting to high operating expenses.

2. Will they be profitable in the long run? (Only time will tell)


7/ Risk of more competitors entering SEA.

1. Lazada and Shopee (Offline to Online groceries delivery)

2. DIDI (Mobility)

3. GoPay (Financial)

And other disruptive competitors in future.


8/ Summary

1. Low/Mediocre Competitive Advantage

2. Excessive Spending, yet unprofitable

3. Lack of big investors investing in the business (Current Quarter).

4. More competitors in the future.


My opinion: Buy, Hold or Sell?

Hold, and why, I think the current business is spending way more than what they could earn. Hence, in my opinion, I think investors who are keen to pick up shares on Grab, should be patient. Wait for their business to become profitable by 2024-2025. (If you are YOLO investors, then by all means starting picking up those shares. Though you will lose out in opportunity costs, because you may find better businesses out there worth investing, which you could x2, x3 or even x5 your returns compared to GRAB).


As always, stay safe and may the markets be ever in your favour!

‌$Grab Holdings(GRAB)$‌‌$Sea Ltd(SE)$‌‌$Alibaba(BABA)$‌‌$DiDi Global Inc.(DIDI)$‌


Disclaimer:

I am not a financial adviser. This thread is for education and entertainment purposes only. Seek professional help before making any investment decision.




Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

  • Hotate
    2022-03-26
    Hotate
    From a customer standpoint, my friends and I basically don’t use Grab unless they provide promo codes. This says a lot about the existing business model and whether it may be profitable.
    • Hayz: 
      from a driver ... won't use unless could not get other calls.
    • Sunraya: 
      Couldn’t agree more!
    • SunrayaReplyHayz: 
      It goes to show how competitive it is, given that they are the leading brand in SEA.
  • SilentInvst1
    2022-03-26
    SilentInvst1
    The space that Grab in is very competitive. As customer in Msia, grabride fee is getting higher, online grocery adoption is slow currently due to less restriction.Good analysis btw
  • ShockaSam
    2022-03-25
    ShockaSam
    I have used Grab services and as a consumer I like it. But from the business perspective there’s much more for them to prove
  • fluffik
    2022-03-24
    fluffik
    GRAB's business model I think is good and I think you can buy a little as a base position.
    • SunrayaReplyfluffik: 
      I agree, but you have to know the procedure of a company going IPO, you have to be profitable for one full year before list on US exchange. Nowadays SPACs works differently from the traditional IPO.
    • fluffikReplySunraya: 
      But many companies start out unprofitable and go through a period of time before they become profitable.
    • Sunraya: 
      Personally, i am conservative investor, so i don’t buy companies that are not profitable. I may miss a 10x or 20x, but that helps me a lot in the long term process. I wish you the best!
  • Ra007
    2022-03-26
    Ra007
    Good one - may the markets be ever in your favour [Strong]
    • Sunraya: 
      :) don’t forget to like and follow for more takeaways!
  • Chillpadi
    2022-03-26
    Chillpadi
    Why hold up your funds in a company that is alien to the US consumer?
    • Sunraya: 
      Once the SPAC closed, retails rush in to get without doing due diligence, buying at steep price, which are now bag holding a pile of crap till god knows when they can see profits.
    • Sunraya: 
      Well said! the only reason, they are listed in US market was because of SoftBank and Uber staking all their cash to invest in Grab. [Cont]
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