Grab Holdings Ltd: 1Q24 group adj. EBITDA beat consensus estimates by 59%
- 1Q24 group adj. EBITDA of USD62mn was up 77% q/q, beating consensus’ USD39mn, on cost controls and mobility segment’s performance
- Raises FY24F group adj. EBITDA guidance to USD250-270mn (prev USD180-200mn), 24% above consensus. Our revised FY24F projection is 12% ahead of guidance assuming seasonal strength in 2H24F
- Maintain BUY with a higher TP of USD4.50 (prev USD4.08) on upward revision in adj. EBITDA
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GRAB provided an update on its segment’s reporting changes. The changes were, i) beginning from 1Q24, the reporting segments will be delivery, mobility, financial services, and others, and advertising contributions, which were part of the enterprise and new initiatives segment, are now reported under the respective segment; ii) a portion of payment transaction revenues and other relevant support costs previously reported under financial services, which also facilitated mobility and delivery transactions, are now allocated to the respective on-demand segments; iii) a portion of regional corporate costs that support all segments are now individually allocated; and iv) it discontinued disclosing financial services’s Total Payment Value (TPV) and instead is focusing on ecosystem transactions and lending.
GRAB has raised its FY24F adj. EBITDA guidance from USD180-200mn to USD250-270mn. The mid-range of the revised guidance is 24% ahead of the consensus estimate of USD210mn and 12% ahead of our previous estimate of USD233mn. Strong mobility demand was seen in 1Q24 due to tourism and multiple events that took place in Southeast Asia, and an uptick in local commutes has also supported this revision. GRAB will be further optimising its cost structure and projects credit losses would narrow. GRAB has maintained its revenue growth guidance of 14%-17% in FY24F, which also supports our view that it is led by superior cost control at the company.
We raise our FY24F/25F group adj. EBITDA by 25%/27%, reflecting 1Q24 performance and revised guidance for FY24F. We made adjustments to our projections based on the revised segmental reporting structure. GRAB has guided for delivery EBITDA margin (as a % of GMV) of 9% in the long term (8.9% in 1Q24). Hence we assumed a stable mobility margin, as we think the increase in driver supply could pose a challenge. For its delivery segment, GRAB has guided for a long-term EBITDA margin (as a % of GMV) of 4% compared to 1.6% in 1Q24. We project this to be achieved in FY26F. We have also factored in the reducing fintech losses and expect the segment to eventually achieve adj. EBITDA breakeven in FY26F. We have assumed 19% y/y growth in total revenue compared to GRAB’s guidance of 14%-17%. Our revised group adj. EBITDA in FY24F/25F is now USD292mn/USD647mn, 39%/29% higher than the consensus’ USD210mn/USD500mn.
We maintain BUY with a higher TP of USD4.50 (prev USD4.08). The higher target price (TP) stems from rolling forward our valuation by 6-months to an average of FY24F-25F We have also revised our adj. EBITDA in FY24F/25F by 25%/27%. We maintain the net cash balance at USD5.1bn. We have factored in 20x EV/EBITDA for the on-demand business, similar to Uber’s, despite it exhibiting a 122% adj. EBITDA CAGR over FY23-25F compared to Uber’s 43%. For fintech, we have factored in 3.5x to its 12-month forward revenue (peer average at 3.5x).
| FY Dec | 1Q2023 | 4Q2023 | 1Q2024 | % chg yoy | % chg qoq |
|---|---|---|---|---|---|
| Revenue | 525 | 653 | 653 | 24.4 | 0.0 |
| Cost of Goods Sold | (372) | (377) | (394) | 5.9 | 4.5 |
| Gross Profit | 153 | 276 | 259 | 69.3 | (6.2) |
| Other Oper. (Exp)/Inc | (357) | (322) | (334) | (6.4) | 3.7 |
| Operating Profit | (204) | (46.0) | (75.0) | (63.2) | 63.0 |
| Other Non Opg (Exp)/Inc | 0.00 | 0.00 | 0.00 | - | - |
| Associates & JV Inc | 0.00 | 0.00 | 0.00 | - | - |
| Net Interest (Exp)/Inc | (34.0) | 54.0 | (23.0) | 32.4 | nm |
| Exceptional Gain/(Loss) | (1.00) | (1.00) | (4.00) | (300.0) | 300.0 |
| Pre-tax Profit | (239) | 7.00 | (102) | 57.3 | nm |
| Tax | (11.0) | 4.00 | (13.0) | 18.2 | nm |
| Minority Interest | 0.00 | 0.00 | 0.00 | - | - |
| Net Profit | (250) | 11.0 | (115) | 54.0 | (1,145.5) |
| Net profit bef Except. | (249) | 12.0 | (111) | 55.4 | (1,025.0) |
| EBITDA | (169) | (9.00) | (35.0) | 79.3 | (288.9) |
| Margins | |||||
| Gross Margins (%) | 29.1 | 42.3 | 39.7 | ||
| Opg Profit Margins (%) | (38.9) | (7.0) | (11.5) | ||
| Net Profit Margins (%) | (47.6) | 1.7 | (17.6) |
Source: Company, DBS
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