Grab: Southeast Asia's SuperApp (Deep Dive)
The Everyday, Everything App destined to dominate Southeast Asia
Contents
Introduction
Company Overview
Industry and Market Analysis
Bull Thesis
Bear Thesis
Bear Thesis Debunked
Moats
Financials
Risks
Valuation
Technicals
Ownership
Concluding Thoughts
Introduction
Grab is a leading Southeast Asian technology company that started as a ride-hailing service in 2012 and has since evolved into a "SuperApp" offering a broad range of services, including mobility, food delivery, financial services, and logistics.
Headquartered in Singapore, Grab operates across major Southeast Asian markets, including Indonesia, Malaysia, Vietnam, Thailand, the Philippines, and Cambodia. The company's mission is to drive Southeast Asia forward by creating economic empowerment for everyone, leveraging technology to overcome the region's challenges and unlock its full potential.
Operating in several countries across Southeast Asia, Grab has positioned itself as a one-stop solution for everyday needs, leveraging technology to create a seamless, integrated ecosystem. The company's growth strategy focuses on deepening its super app ecosystem, expanding financial services, and driving towards profitability while maintaining its market leadership in Southeast Asia's digital economy.
I view GRAB 0.00%↑ as a compelling investment on a 5 to 10-year timeframe. The investment thesis for Grab centres around its ability to dominate the competition in 3 key areas of growth, operating in the most competitive landscape in the world.
Company Overview
Grab operates several business lines. For the sake of brevity, we will focus on just the 3 main business lines: Deliveries, Mobility and Financial Services.
Deliveries:
Deliveries refer to GrabFood which offers on-demand food delivery services and GrabExpress that provides parcel and package delivery services.
Leveraging Grab’s existing infrastructure from its mobility business, the deliveries segment experienced rapid growth driven by rising demand for on-demand delivery in the region.
Mobility:
Mobility refers to ride-hailing services for passengers, including cars, motorcycles, and taxis.
Grab was founded on the thesis of mobility and it continues to be an important segment of Grab’s business.
Grab is the largest ride-hailing platform in Southeast Asia with dominant market share, even beating US giant Uber in direct competition.
Financial Services:
Financial Services is Grab’s newest business line and has expanded into many categories; including GrabPay digital wallet and payment processing services, lending and insurance products for consumers and small businesses, and wealth management.
Industry and Market Analysis
Grab operates solely in Southeast Asia and has a dominant position over rivals. However, it is a highly competitive space with well-funded competitors.
In the deliveries segment, Grab is in direct competition with FoodPanda, ShopeeFood and Deliveroo in particular. Grab does not currently maintain a monopoly in this segment, which has resulted in lower margins due to a lack of pricing power. (17.8% Adjusted EBITDA). However, it is important to note that Grab is a late entrant into the space and yet, has taken market share consistently from incumbents FoodPanda and Deliveroo.
In the mobility segment, Grab is in competition with the likes of Gojek, Ryde, BOLT, and Tada. However, Grab has a virtual monopoly in all countries in the region apart from Indonesia where they have a duopoly with Gojek. This is reflected by the delivery segment’s 25.5% adjusted EBITDA margin.
In the FinServices space, competition is much stronger, although Grab is still a major player. Gojek with GoPay, Sea Limited with ShopeePay, OVO and Dana are just some of the competitors in the market. In digital banking, Sea Limited with MariBank, GoTo Financial, Tonik and KBank are among the key competitors.
Grab has over 50% market share in Southeast Asia within the deliveries segment, dwarfing their competitors such as FoodPanda, Gojek and ShopeeFood.
In the ride-hailing market, Grab maintains a leadership position across the region and in every market they operate in.
In digital banking, GrabPay is synonymous with consumers and has been the most popular e-wallet in Singapore for the last 5 years. In 2022, GrabPay had an estimated 4.9 million users in Singapore, which is 96% (!!) of Singapore’s adult population.