Maybank has downgraded Grab to a non-consensus HOLD and lowered its TP by 11% to USD4. While the structural growth drivers are in place and Grab has a scale advantage, the house sees mild growth headwinds and monetization pausing. This is owing to: 1) take-rates are already in line-high vs global peers; 2) rising cost/inflation pressures weighing on consumers’
discretionary spending and driver-partners’ take-home earnings are noncompetitive. We also see risk of a slight flare-up in competitive intensity with a better capitalized Gojek and XanhSM’s entry into multiple markets.
Cost-of-living concerns place multi-faceted pressures
Grab’s OFD take-rates at 22% are already on the higher side of more evolved markets of the US and China while ride-hailing services are in line. This suggests a potential capping of the rates. More importantly, Maybank IB said it finds Grab’s services could face pricing/commission pressure both from the consumers as well as driver-merchant partners. Based on its survey, 65% of the consumers intend to lower usage in response to price increases. Driver-partner unit economic analysis (based on channel checks) suggests relative driver earnings pressure, which exerts supply side pressure.
Risk of slight flare-up in competitive intensity
The house sees slight risk of competitive intensity in Indonesia to flare up. According to its survey results, there is a 20-30% higher preference for Gojek over Grab vs. flat-12% higher market share of Grab over Gojek. Moreover, the house does note
entry of XanhSM in Vietnam and Indonesia may prompt competitive reactions from the incumbent operators (ala e-commerce experience).
As for the survey in Vietnam, it suggests XanhSM is already ahead on consumer preference relative to its market share.
Why HOLD? Mild pressures already within expectations
Grab’s 2024 revenue growth guidance of 14-17% is conservative and Maybank IB sees room for upward revision. Underpenetrated ASEAN markets coupled with Grab’s material competitive moats leave room for sustained high growth despite competitive skirmishes. On the valuation front (EV/GMV, EV/S), Grab is in line with its global peers, offering a similar growth CAGR.
