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Grab Holdings Ltd 20-F Analysis & Summary – 3/14/2025

⚠️This is not investment advice.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️

Grab Holdings Limited

Filing date:

03/14/2025

TLDR:

ELI5:

Grab is like a one-stop app for rides, food delivery, and payments in Southeast Asia. They’re making more money and losing less, but still face tough competition and changing rules.

Accession #:

0001855612-25-000013

Published on

Analyst Summary

  • Revenue increased significantly, driven by on-demand GMV and financial services growth.
  • Net losses substantially decreased due to improved operational efficiency and cost management.
  • Adjusted EBITDA turned positive, demonstrating progress towards profitability.
  • On-demand GMV continued to grow, reflecting increased user engagement.
  • Gross Profit Margin increased from 36.46% to 41.97%, a 15.11% change.
  • Operating Profit Margin improved from -21.99% to -6.01%, a 72.67% change.
  • Net Profit Margin improved from -20.56% to -5.65%, a 72.52% change.
  • Loss per share improved from -0.11 to -0.03, a 72.73% change.
  • Current Ratio decreased from 3.90 to 2.53, a -35.13% change.
  • Cash Ratio decreased from 2.12 to 1.14, a -46.23% change.
  • Debt-to-Equity Ratio increased from 0.36 to 0.46, a 27.78% change.
  • Interest Coverage Ratio improved from -4.24 to -0.58, an 86.32% change.
  • Revenue Growth was 18.57%.
  • Net Income Growth was -67.42%.
  • EPS Growth was -72.73%.

Opportunities and Risks

  • Intense Competition: The ride-hailing and delivery markets are highly competitive, with established players and new entrants constantly vying for market share.
  • Regulatory Uncertainty: Evolving regulations in Southeast Asia could impact Grab’s business model and require costly compliance measures.
  • Driver Classification: Potential reclassification of driver-partners as employees could significantly increase labor costs and legal liabilities.
  • Data Breaches: The company’s reliance on collecting and processing personal data makes it vulnerable to security breaches and privacy violations.
  • Anti-Corruption: Potential violations of anti-corruption laws related to operations in one of the countries in which Grab operates.
  • Market Expansion: Significant growth potential in Southeast Asia due to increasing urbanization, mobile adoption, and digitalization of services.
  • Superapp Ecosystem: Synergies between deliveries, mobility, and financial services can drive user acquisition, engagement, and retention.
  • Financial Services Growth: Expanding financial services offerings, including digital banking, can tap into a large unbanked and underserved population.
  • Technological Innovation: Continued investment in AI, machine learning, and data analytics can improve operational efficiency, personalize user experiences, and enhance fraud prevention.

Potential Implications

Company Performance

  • Focus on cost optimization and efficient use of incentives to improve profitability.
  • Proactively engage with regulators to navigate evolving regulatory landscapes.
  • Strengthen cybersecurity measures to protect user data and prevent breaches.
  • Continue to innovate and expand financial services offerings to drive ecosystem growth.

SEC Filing Report: Grab Holdings Ltd – Form 20-F (2024)

Executive Summary

This report analyzes Grab Holdings Ltd’s Form 20-F filing for the fiscal year ended December 31, 2024. Key findings include revenue growth driven by increased on-demand GMV and financial services, a significant reduction in net losses, and improved Adjusted EBITDA. However, the company continues to rely on incentives, faces intense competition, and operates in a complex regulatory environment. Overall, the report suggests a cautiously optimistic outlook, contingent on Grab’s ability to manage costs, navigate regulatory hurdles, and maintain its competitive edge.

Company Overview

Grab Holdings Ltd is Southeast Asia’s leading superapp, providing deliveries, mobility, and financial services across eight countries. The company aims to drive the region forward by creating economic empowerment for everyone. Recent developments include the launch of insurance underwriting business in Singapore and the acquisition of Chope and Everrise.

Detailed Analysis

Financial Statement Analysis

The following table summarizes key financial data from the filing:

Metric 2024 (USD Millions) 2023 (USD Millions) 2022 (USD Millions)
Revenue 2,797 2,359 1,433
Net Loss (158) (485) (1,740)
Adjusted EBITDA 313 (22) (793)
On-Demand GMV 18,364 15,785 14,113

Key Observations:

  • Revenue Growth: Significant increase in revenue, indicating strong market demand and successful expansion of services.
  • Loss Reduction: Substantial decrease in net losses, suggesting improved operational efficiency and cost management.
  • Adjusted EBITDA Turnaround: Positive Adjusted EBITDA, demonstrating progress towards profitability.
  • GMV Growth: Continued growth in on-demand GMV, reflecting increased user engagement and transaction volume.

Management’s Discussion and Analysis (MD&A) Insights

Management attributes the revenue growth to increased on-demand GMV and financial services contributions. The reduction in net losses is linked to effective cost management and strategic use of incentives. The MD&A highlights the importance of expanding and diversifying offerings, maintaining a strong driver- and merchant-partner base, and enhancing the superapp platform.

Risk and Opportunity Assessment

Risks:

  • Intense Competition: The ride-hailing and delivery markets are highly competitive, with established players and new entrants constantly vying for market share.
  • Regulatory Uncertainty: Evolving regulations in Southeast Asia could impact Grab’s business model and require costly compliance measures.
  • Driver Classification: Potential reclassification of driver-partners as employees could significantly increase labor costs and legal liabilities.
  • Data Breaches: The company’s reliance on collecting and processing personal data makes it vulnerable to security breaches and privacy violations.
  • Anti-Corruption: Potential violations of anti-corruption laws related to operations in one of the countries in which Grab operates.

Opportunities:

  • Market Expansion: Significant growth potential in Southeast Asia due to increasing urbanization, mobile adoption, and digitalization of services.
  • Superapp Ecosystem: Synergies between deliveries, mobility, and financial services can drive user acquisition, engagement, and retention.
  • Financial Services Growth: Expanding financial services offerings, including digital banking, can tap into a large unbanked and underserved population.
  • Technological Innovation: Continued investment in AI, machine learning, and data analytics can improve operational efficiency, personalize user experiences, and enhance fraud prevention.

Uncommon Metrics & Red Flags

  • The filing mentions a non-competition agreement with Uber that will expire one year after Uber disposes of all shareholdings in Grab. This could lead to increased competition if Uber re-enters the market.
  • The company is subject to anti-corruption, anti-bribery, anti-money laundering and countering the financing of terrorism laws and has operations in certain countries known to experience high levels of corruption.

Conclusion & Actionable Insights

Grab Holdings Ltd is demonstrating progress in its financial performance, with strong revenue growth and a move towards profitability. However, the company faces significant challenges, including intense competition, regulatory uncertainty, and potential liabilities related to driver classification and data security. Investors should closely monitor Grab’s ability to manage these risks and capitalize on its growth opportunities.

Overall Assessment: Hold

Recommendations:

  • Focus on cost optimization and efficient use of incentives to improve profitability.
  • Proactively engage with regulators to navigate evolving regulatory landscapes.
  • Strengthen cybersecurity measures to protect user data and prevent breaches.
  • Continue to innovate and expand financial services offerings to drive ecosystem growth.

Disclaimer: This report is for informational purposes only and should not be considered financial advice. The analysis is based on publicly available information and involves subjective interpretations. Investors should conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions.

Financial Analysis of Grab Holdings Limited (GRAB)

1. Commentary

Grab Holdings Limited’s financial performance in 2024 shows a mixed picture. Revenue increased significantly, indicating strong growth in its core markets. The company managed to reduce its operating loss compared to previous years, suggesting improved operational efficiency. However, the company still reported a net loss for the year, and significant incentives continue to impact profitability. Adjusted EBITDA improved substantially, driven by growth in Deliveries and Mobility, but Financial Services remains a drag.

2. Financial Ratio and Metric Analysis

Profitability

  • Gross Profit Margin

    • Metric: (Revenue – Cost of Revenue) / Revenue = (2797 – 1623) / 2797 = 41.97%
    • Trend: 2023: (2359-1499)/2359 = 36.46%. Percentage Change: (41.97-36.46)/36.46 = 15.11%
    • Industry: The online food delivery industry typically has gross profit margins ranging from 30% to 50%. Grab’s margin is within this range, but towards the lower end, suggesting room for improvement in cost management.
  • Operating Profit Margin

    • Metric: Operating Loss / Revenue = -168 / 2797 = -6.01%
    • Trend: 2023: -519/2359 = -21.99%. Percentage Change: (-6.01 – (-21.99))/-21.99 = -72.67%
    • Industry: Many tech companies in the growth phase have negative operating margins. However, the trend towards profitability is a positive sign. Established tech companies often have operating margins of 15-25%.
  • Net Profit Margin

    • Metric: Loss for the year / Revenue = -158 / 2797 = -5.65%
    • Trend: 2023: -485/2359 = -20.56%. Percentage Change: (-5.65 – (-20.56))/-20.56 = -72.52%
    • Industry: Similar to operating margin, a negative net profit margin is not uncommon for growth-focused tech companies. The trend is more important than the absolute value.
  • Return on Assets (ROA)

    • Metric: Loss for the year / Total Assets = -158 / 9295 = -1.70%
    • Trend: 2023: -485/8792 = -5.52%. Percentage Change: (-1.70 – (-5.52))/-5.52 = -69.20%
    • Industry: ROA varies significantly by industry. A negative ROA indicates the company is not efficiently using its assets to generate profit.
  • Return on Equity (ROE)

    • Metric: Loss for the year attributable to owners of the Company / Equity attributable to owners of the Company = -105 / 6399 = -1.64%
    • Trend: 2023: -434/6449 = -6.73%. Percentage Change: (-1.64 – (-6.73))/-6.73 = -75.63%
    • Industry: A negative ROE suggests the company is not generating returns for its shareholders.
  • Earnings Per Share (EPS)

    • Metric (Basic): Loss per share = -0.03
    • Metric (Diluted): Loss per share = -0.03
    • Trend: 2023: -0.11. Percentage Change: (-0.03 – (-0.11))/-0.11 = -72.73%
    • Industry: Negative EPS reflects the company’s current unprofitability.

Liquidity

  • Current Ratio

    • Metric: Current Assets / Current Liabilities = 6566 / 2592 = 2.53
    • Trend: 2023: 5768/1478 = 3.90. Percentage Change: (2.53-3.90)/3.90 = -35.13%
    • Industry: A current ratio above 1 indicates the company has sufficient current assets to cover its current liabilities. A ratio of 2.53 is generally considered healthy, but the decrease from 2023 should be monitored.
  • Quick Ratio (Acid-Test Ratio)

    • Metric: (Current Assets – Inventories) / Current Liabilities = (6566 – 59) / 2592 = 2.51
    • Trend: 2023: (5768-49)/1478 = 3.87. Percentage Change: (2.51-3.87)/3.87 = -35.14%
    • Industry: Similar to the current ratio, a quick ratio above 1 is generally desirable. The decrease from 2023 mirrors the current ratio trend.
  • Cash Ratio

    • Metric: Cash and Cash Equivalents / Current Liabilities = 2964 / 2592 = 1.14
    • Trend: 2023: 3138/1478 = 2.12. Percentage Change: (1.14-2.12)/2.12 = -46.23%
    • Industry: A cash ratio above 1 indicates the company can cover its current liabilities with its most liquid assets. The decrease from 2023 is significant and warrants attention.

Solvency/Leverage

  • Debt-to-Equity Ratio

    • Metric: Total Liabilities / Total Equity = 2944 / 6351 = 0.46
    • Trend: 2023: 2324/6468 = 0.36. Percentage Change: (0.46-0.36)/0.36 = 27.78%
    • Industry: A debt-to-equity ratio of 0.46 suggests a moderate level of leverage. The increase from 2023 indicates the company is using more debt to finance its operations.
  • Debt-to-Assets Ratio

    • Metric: Total Liabilities / Total Assets = 2944 / 9295 = 0.32
    • Trend: 2023: 2324/8792 = 0.26. Percentage Change: (0.32-0.26)/0.26 = 23.08%
    • Industry: A debt-to-assets ratio of 0.32 indicates that 32% of the company’s assets are financed by debt. The increase from 2023 is consistent with the debt-to-equity ratio.
  • Interest Coverage Ratio (Times Interest Earned)

    • Metric: Operating Loss + Interest Expense / Interest Expense = (-168 + 106) / 106 = -0.58
    • Trend: 2023: (-519+99)/99 = -4.24. Percentage Change: (-0.58 – (-4.24))/-4.24 = -86.32%
    • Industry: A negative interest coverage ratio indicates the company is not generating enough operating income to cover its interest expenses.

Activity/Efficiency

  • Asset Turnover

    • Metric: Revenue / Total Assets = 2797 / 9295 = 0.30
    • Trend: 2023: 2359/8792 = 0.27. Percentage Change: (0.30-0.27)/0.27 = 11.11%
    • Industry: An asset turnover ratio of 0.30 suggests the company is not efficiently utilizing its assets to generate revenue.

Valuation

  • Price-to-Earnings Ratio (P/E)

    • Metric: Market Cap / Net Income. Market Cap = 4.40 * Outstanding Shares. Outstanding Shares = 3,950,499 + 119,799 = 4,070,298 (in thousands) = 4,070,298,000. Market Cap = 4.40 * 4,070,298,000 = $17,909,311,200 = 17,909.31 (in millions). Net Income = -158. P/E = 17909.31/-158 = -113.35
    • Trend: N/A
    • Industry: A negative P/E ratio is not meaningful and indicates the company’s current unprofitability.
  • Price-to-Book Ratio (P/B)

    • Metric: Market Cap / Total Equity = 17909.31 / 6351 = 2.82
    • Trend: N/A
    • Industry: A P/B ratio of 2.82 suggests the market values the company at 2.82 times its book value.
  • Price-to-Sales Ratio (P/S)

    • Metric: Market Cap / Revenue = 17909.31 / 2797 = 6.40
    • Trend: N/A
    • Industry: A P/S ratio of 6.40 indicates investors are willing to pay $6.40 for every dollar of revenue.
  • Enterprise Value to EBITDA (EV/EBITDA)

    • Metric: (Market Cap + Total Debt – Cash) / EBITDA. Total Debt = 241 + 123 = 364. Cash = 2964. EBITDA = 313. EV = (17909.31 + 364 – 2964) / 313 = 52.14
    • Trend: N/A
    • Industry: An EV/EBITDA ratio of 52.14 is relatively high, suggesting the company is overvalued based on its current earnings.

Growth Rates

  • Revenue Growth

    • Metric: (2024 Revenue – 2023 Revenue) / 2023 Revenue = (2797 – 2359) / 2359 = 18.57%
    • Trend: N/A
    • Industry: This indicates a strong growth trajectory.
  • Net Income Growth

    • Metric: (2024 Net Income – 2023 Net Income) / 2023 Net Income = (-158 – (-485)) / -485 = -67.42%
    • Trend: N/A
    • Industry: While still negative, the significant decrease in net loss is a positive sign.
  • EPS Growth

    • Metric: (2024 EPS – 2023 EPS) / 2023 EPS = (-0.03 – (-0.11)) / -0.11 = -72.73%
    • Trend: N/A
    • Industry: The increase in EPS is consistent with the decrease in net loss.

Other Relevant Metrics

  • Total Segment Adjusted EBITDA: This is a non-GAAP metric that Grab uses to measure the profitability of its different business segments. It is calculated by adding back depreciation and amortization, share-based compensation expenses, impairment losses, restructuring costs, and legal, tax, and regulatory settlement provisions to operating loss. Regional corporate costs are then deducted to arrive at Total Segment Adjusted EBITDA. While Adjusted EBITDA is positive, it excludes significant expenses.
  • Deliveries Segment Adjusted EBITDA as a % of GMV: Increased from 0.8% to 1.7%
  • Mobility Segment Adjusted EBITDA as a % of GMV: Remained constant at 8.6%
  • Financial Services Segment Adjusted EBITDA as a % of Revenue: Increased from -96.3% to -41.4%
  • On-demand GMV: Increased by 16%
  • Group MTUs (monthly average in millions): Increased by 16%
  • Loan portfolio: Increased by 64%

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️