Grab Holdings: Turning The Tide With Profitability Indicates A Buy

Seeking Alpha01-13

SummaryGrab Holdings' shift from 'growth-at-all-costs' to a focus on profitability, operational efficiency, and strategic business developments has driven its stock price recovery.The company's ...

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Madluvyz
·01-14
Great Analysis on GRAB!
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Madluvyz
·01-14
Great detailed analysis on the argument for upside view on GRAB. Used to hold this stock when it IPO, but cut loss eventually. After reading your article, I might explore on taking a position on it again. Cheers!~
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As we all experienced, there was a pandemic wave during this period. The slowdown in growth in the food distribution sector was a big factor after this pandemic. Then the company's income fell by more than 500 basis points due to the fluctuations in foreign exchange. In addition, the company already had a natural operational expense. This operational expense was higher than normal due to R&D since it was a new company","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"GRAB":"Grab Holdings"},"translate_title":"Grab Holdings：以盈利能力扭转局势表明买入","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"GRAB":1.1},"content_text":"SummaryGrab Holdings' shift from 'growth-at-all-costs' to a focus on profitability, operational efficiency, and strategic business developments has driven its stock price recovery.The company's diversified services and expansion into financial services, coupled with a successful share buyback program, demonstrate strong growth potential.Positive financial trends, including revenue growth and improving net income, signal a promising future despite past losses and challenging macroeconomic conditions.Technical analysis indicates a solid support level at $4, suggesting a potential bull run with a short-term target of $6, making GRAB a 'Buy.'tupungatoFrom the end of 2021 to the middle of 2022, Grab Holdings Limited (NASDAQ:GRAB) dropped 86% to $2.26 and was unable to rise above $4 for about two and a half years. But company started to reverse this bad fate by running to $5.70 by the end of 2024. In this article, I will explain in detail how GRAB reversed this fate and therefore why I maintain a \"buy\" position.GRAB is a Southeast Asia-based app that provides multiple services on a single platform. The company has a GrabCar division that offers a service kind of UBER, a Grabfood division that offers food delivery services like DoorDash, and a GrabExpress division that offers classic cargo services. In addition, the app has also branched out into financial services with the GrabPay payment system. Is it over? No. The company also has a service where you can book hotels.Business DevelopmentsBeing a company that operates in so many areas has many advantages and disadvantages. Yes, the company's income sources are diversified, but at the same time, it becomes more difficult to maintain customer satisfaction and service quality at a certain level. Yes, since the company is involved in so many sectors, the company's risk decreases in a sense due to diversification, but at the same time, operational expenses increase.Well, in the introduction, I said that the company's shares experienced a serious decline in 2022. What was the reason for this and can such a decline occur again? First of all, it is not possible to attribute this decline to a single reason. As we all experienced, there was a pandemic wave during this period. The slowdown in growth in the food distribution sector was a big factor after this pandemic. Then the company's income fell by more than 500 basis points due to the fluctuations in foreign exchange. In addition, the company already had a natural operational expense. This operational expense was higher than normal due to R&D since it was a new company. These increased capital investment requirements to the highest level and high marketing costs also strained profits. Rising inflation and interest rates also created very negative macroeconomic conditions for the company.Therefore, GRAB opened its eyes in an extremely negative global and macroeconomic environment. This caused the company's shares to fall 80% below their IPO price. So what happened that GRAB broke the $4 resistance again after years and ran to $5.70, and now I am on the buying side for the stock?First of all, I need to touch on the company's business developments. In the last quarter, the company's monthly transaction users reached 42 million. 42 million indicates a 19% growth year-on-year. In addition, the company's on-demand gross merchandise value increased by 15% year-on-year to $4.7 billion. I mentioned in the previous paragraphs that GRAB is a digital banking application. The deposits of this digital banking application increased threefold and on top of that, the company's loan portfolio increased by 81%.The company's business developments and growth were effective in this price increase, but GRAB also made minor changes to its strategy. The company's focus from the beginning was \"growth-at-all-costs\", but now the company has shifted this focus to \"profitability\". Let me explain what this change means. The company is now trying to maximize operational efficiency by cutting unnecessary expenses. We have already seen the effects of this in the last quarter financials. I will touch on this in the next paragraphs. In addition to these, the company completed its share buyback program and showed investors that it trusts the business.These reasons I mentioned caused the stock to enter a bull run in the second half of 2024 and reach $5.70. So what are GRAB's business development plans for 2025?GRAB will focus on providing premium products to its customers in 2024, with the strength it gets from the growth of its \"Saver\" tier. While doing this, the company will further develop its advertising business. In the past period, we have seen a 46% year-on-year growth in the company's active advertisers, so this is a full promise. In addition, like every company, GRAB will continue to invest in AI and data analysis to increase operational efficiency.It is said that the company will focus on deepening its market penetration in Southeast Asia. Considering that the company currently only holds 4% of the estimated $375 billion total addressable market, this shows that the company has significant growth potential. The company also projects a 12% CAGR for gross merchandise value from 2023 to 2026 and plans to balance premium and value products to stabilize margins.I have touched on its financials a bit, but I need to analyze it quantitatively to fully paint the picture for the upcoming quarters.FinancialsGRAB reported $716 million in revenue in the last quarter. This means that revenue grew by 16.42% year-over-year. The company's revenue has been growing steadily since 2022 and the growth has been slowing down year-over-year.Author created with data from Seeking AlphaNormally, I would provide a forecast for future growth by averaging the growth from year to year and analyzing seasonality, but that is impossible to do here. However, it is clear that the change from year to year is in an exponential downtrend. Therefore, based on exponential regression, it would be logical to expect a 10.57% YOY increase next quarter. This means that revenues will be around $722 million next quarter. Historically, it is most logical to expect revenues to increase next quarter in any case.Author created with data from Seeking AlphaHowever, no matter how much revenues continue to grow, how net income behaves during this process is much more important. Net margin, like every new company, was in the negative for a while after it was founded. This is a perfectly acceptable view, since the company eventually poured a significant amount of money into R&D. What I pay attention to here is that net income is in a slowly increasing trend.Author created with data from Seeking AlphaGRAB had a negative net income in every quarter of 2022 and the net income it announced each quarter was an average of -420 million. In 2023, the company announced a positive net income once in the last quarter and the average net income of the quarters increased to -108 million. In 2024, GRAB, which announced a positive net income in the 3rd quarter, is currently at a loss with an average of -43 million in 2023 net income, although I predict that the company has a very high potential to announce a positive net income in the 4th quarter due to the change in the company strategy and their complete focus on profitability.Author created with data from Seeking AlphaTherefore, the company is now starting to turn from a financial loss to a profit. So what is the economic situation?Economic Profit AnalysisSince the company is in the development phase, I do not think that comparing the valuation ratios with their substitutes will give a sufficiently healthy result. Therefore, I have to skip this step in this analysis, which I do in every analysis. But I want to do the economic profitability analysis.Some of you know, some of you don't, profitability analysis, unlike financial profitability, is the normalization of the company's profitability according to risk-free instruments by calculating the ROIC and WACC of the stock, namely the Weighted Average Cost of Capital.Author created with data from TradingViewWhen I did GRAB's economic profitability analysis since 2021, the first thing that caught my attention was that the company's WACC did not change significantly. Historically, the company's WACC value has been around the average of -8.61%. WACC is the average rate that the company is expected to pay to all shareholders to finance its assets. A negative WACC value means that the company has to receive $0.86 from shareholders for every dollar it finances. Since it is not a single determining factor, the economic profitability calculation is made by taking ROIC into account.While WACC remains stagnant, ROIC's approaching positiveness starting from the second quarter of 2022 is a very good sign. I have also shown in my previous CEG and GASS analyses that significant increases in stock prices are experienced in quarters where economic profitability is positive. Therefore, I think it would not be surprising for me to be on the buying side of a stock that has a negative economic profitability and where this economic profitability is on a positive trend day by day.Technical AnalysisTechnically, analyzing GRAB will allow us to determine the ideal buying and correction areas more sharply. When doing technical analysis, I will use the price action method and the RSI indicator in particular.TradingViewIn the weekly time frame, GRAB started its run in August 2024 and saw the $5.72 level in the last quarter of 2024. I detected that an order block was created at this level, especially in 2022. Therefore, the $5.50–6 range seems to be a difficult resistance for GRAB to break. GRAB has been making the expected corrections since that day. I predict that this correction will be up to the $4 level and that this level, which was previously a resistance level, will be used as a support. I can also support this prediction with the Fibonacci correction tool. When the Fibonacci correction is applied to the run that started in August, the 0.5–0.618 region corresponds exactly to the $4 support.When GRAB reaches this support, the RSI will also be around 50. Considering that the RSI has not dropped to 30 except for GRAB's historic decline in 2022, I can say that this level will be a very solid support level.After holding on to the support, the scenario for GRAB will turn into a bull run again. My first short-term target in this run is $6. I can clearly say that if the economic and financial profitability is provided to investors who will hold it for the long term, the stock can see the IPO price again.Risks and ChallengesWe write this section for every stock, but when it comes to GRAB, this section becomes much more valuable. The risks of new companies are always much more greater than the risks of mature companies. So I need to tell my readers that this company is a new and developing company. When it comes to the risks regarding competition, I think that GRAB's competition with companies such as Foodpanda and Gojek, especially in the region where it operates, should be closely monitored. If GRAB falls behind in this competition, its margins may decrease. In addition, the company's increased customer acquisition costs are another factor that can narrow margins. The company's operation in the fintech sector also means that the company is slightly more exposed to financial risks than normal in a macro economically challenging environment such as Southeast Asia.ConclusionAs a result, GRAB is a company that is in financial loss like every new and developing company. However, this does not prevent the company from walking towards profitability in a stable manner. In addition to its financial and economic promise, its business developments are also very positive. Technical indicators show that GRAB, which is in the correction process, is approaching the buy level. As long as the company stabilizes its margins and provides sustainable profitability, I will continue to maintain my \"buy\" position.","kind":"news","is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[{"id":392184722125272,"gmtCreate":1736792418803,"gmtModify":1736792422489,"author":{"id":"3569739151630202","authorId":"3569739151630202","name":"Madluvyz","avatar":"https://community-static.tradeup.com/news/bb30e83c3d8123d66b5adbf1af552e9d","vip":1,"hat":"https://static.tigerbbs.com/4c5ceab71416b120bab4604c0754b52a","crmLevel":7,"crmLevelSwitch":1,"idStr":"3569739151630202","authorIdStr":"3569739151630202"},"htmlText":"Great Analysis on GRAB!","listText":"Great Analysis on GRAB!","text":"Great Analysis on GRAB!","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/392184722125272","repostId":1130058726,"repostType":4,"repost":{"id":"1130058726","kind":"news","pubTimestamp":1736753400,"share":"https://ttm.financial/m/news/1130058726?lang=&edition=fundamental","pubTime":"2025-01-13 15:30","market":"us","language":"en","title":"Grab Holdings: Turning The Tide With Profitability Indicates A Buy","url":"https://stock-news.laohu8.com/highlight/detail?id=1130058726","media":"Seeking Alpha","summary":"First of all, it is not possible to attribute this decline to a single reason. As we all experienced, there was a pandemic wave during this period. The slowdown in growth in the food distribution sector was a big factor after this pandemic. Then the company's income fell by more than 500 basis points due to the fluctuations in foreign exchange. In addition, the company already had a natural operational expense. This operational expense was higher than normal due to R&D since it was a new company","content":"<html><head></head><body><h2 id=\"id_4223372060\">Summary</h2><ul style=\"\"><li><p>Grab Holdings&#39; shift from &#39;growth-at-all-costs&#39; to a focus on profitability, operational efficiency, and strategic business developments has driven its stock price recovery.</p></li><li><p>The company&#39;s diversified services and expansion into financial services, coupled with a successful share buyback program, demonstrate strong growth potential.</p></li><li><p>Positive financial trends, including revenue growth and improving net income, signal a promising future despite past losses and challenging macroeconomic conditions.</p></li><li><p>Technical analysis indicates a solid support level at $4, suggesting a potential bull run with a short-term target of $6, making GRAB a &#39;Buy.&#39;</p></li></ul><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/6b37808aab461b958c58f017e3818257\" alt=\"tupungato\" title=\"tupungato\" tg-width=\"750\" tg-height=\"500\"/><span>tupungato</span></p><p>From the end of 2021 to the middle of 2022, Grab Holdings Limited (NASDAQ:GRAB) dropped 86% to $2.26 and was unable to rise above $4 for about two and a half years. But company started to reverse this bad fate by running to $5.70 by the end of 2024. In this article, I will explain in detail how GRAB reversed this fate and therefore why I maintain a &#34;buy&#34; position.</p><p>GRAB is a Southeast Asia-based app that provides multiple services on a single platform. The company has a GrabCar division that offers a service kind of UBER, a Grabfood division that offers food delivery services like DoorDash, and a GrabExpress division that offers classic cargo services. In addition, the app has also branched out into financial services with the GrabPay payment system. Is it over? No. The company also has a service where you can book hotels.</p><h2 id=\"id_1916277783\">Business Developments</h2><p>Being a company that operates in so many areas has many advantages and disadvantages. Yes, the company&#39;s income sources are diversified, but at the same time, it becomes more difficult to maintain customer satisfaction and service quality at a certain level. Yes, since the company is involved in so many sectors, the company&#39;s risk decreases in a sense due to diversification, but at the same time, operational expenses increase.</p><p>Well, in the introduction, I said that the company&#39;s shares experienced a serious decline in 2022. What was the reason for this and can such a decline occur again? First of all, it is not possible to attribute this decline to a single reason. As we all experienced, there was a pandemic wave during this period. The slowdown in growth in the food distribution sector was a big factor after this pandemic. Then the company&#39;s income fell by more than 500 basis points due to the fluctuations in foreign exchange. In addition, the company already had a natural operational expense. This operational expense was higher than normal due to R&amp;D since it was a new company. These increased capital investment requirements to the highest level and high marketing costs also strained profits. Rising inflation and interest rates also created very negative macroeconomic conditions for the company.</p><p>Therefore, GRAB opened its eyes in an extremely negative global and macroeconomic environment. This caused the company&#39;s shares to fall 80% below their IPO price. So what happened that GRAB broke the $4 resistance again after years and ran to $5.70, and now I am on the buying side for the stock?</p><p>First of all, I need to touch on the company&#39;s business developments. In the last quarter, the company&#39;s monthly transaction users reached 42 million. 42 million indicates a 19% growth year-on-year. In addition, the company&#39;s on-demand gross merchandise value increased by 15% year-on-year to $4.7 billion. I mentioned in the previous paragraphs that GRAB is a digital banking application. The deposits of this digital banking application increased threefold and on top of that, the company&#39;s loan portfolio increased by 81%.</p><p>The company&#39;s business developments and growth were effective in this price increase, but GRAB also made minor changes to its strategy. The company&#39;s focus from the beginning was &#34;growth-at-all-costs&#34;, but now the company has shifted this focus to &#34;profitability&#34;. Let me explain what this change means. The company is now trying to maximize operational efficiency by cutting unnecessary expenses. We have already seen the effects of this in the last quarter financials. I will touch on this in the next paragraphs. In addition to these, the company completed its share buyback program and showed investors that it trusts the business.</p><p>These reasons I mentioned caused the stock to enter a bull run in the second half of 2024 and reach $5.70. So what are GRAB&#39;s business development plans for 2025?</p><p>GRAB will focus on providing premium products to its customers in 2024, with the strength it gets from the growth of its &#34;Saver&#34; tier. While doing this, the company will further develop its advertising business. In the past period, we have seen a 46% year-on-year growth in the company&#39;s active advertisers, so this is a full promise. In addition, like every company, GRAB will continue to invest in AI and data analysis to increase operational efficiency.</p><p>It is said that the company will focus on deepening its market penetration in Southeast Asia. Considering that the company currently only holds 4% of the estimated $375 billion total addressable market, this shows that the company has significant growth potential. The company also projects a 12% CAGR for gross merchandise value from 2023 to 2026 and plans to balance premium and value products to stabilize margins.</p><p>I have touched on its financials a bit, but I need to analyze it quantitatively to fully paint the picture for the upcoming quarters.</p><h2 id=\"id_156587777\">Financials</h2><p>GRAB reported $716 million in revenue in the last quarter. This means that revenue grew by 16.42% year-over-year. The company&#39;s revenue has been growing steadily since 2022 and the growth has been slowing down year-over-year.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/7681309f1a58201fa505779037b1b3aa\" alt=\"Author created with data from Seeking Alpha\" title=\"Author created with data from Seeking Alpha\" tg-width=\"640\" tg-height=\"396\"/><span>Author created with data from Seeking Alpha</span></p><p>Normally, I would provide a forecast for future growth by averaging the growth from year to year and analyzing seasonality, but that is impossible to do here. However, it is clear that the change from year to year is in an exponential downtrend. Therefore, based on exponential regression, it would be logical to expect a 10.57% YOY increase next quarter. This means that revenues will be around $722 million next quarter. Historically, it is most logical to expect revenues to increase next quarter in any case.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/977f8578f04539e91dbe4733ad7349f6\" alt=\"Author created with data from Seeking Alpha\" title=\"Author created with data from Seeking Alpha\" tg-width=\"640\" tg-height=\"396\"/><span>Author created with data from Seeking Alpha</span></p><p>However, no matter how much revenues continue to grow, how net income behaves during this process is much more important. Net margin, like every new company, was in the negative for a while after it was founded. This is a perfectly acceptable view, since the company eventually poured a significant amount of money into R&amp;D. What I pay attention to here is that net income is in a slowly increasing trend.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/a2bf3c8fb2be3cc6bed8d6bc17ee0d54\" alt=\"Author created with data from Seeking Alpha\" title=\"Author created with data from Seeking Alpha\" tg-width=\"640\" tg-height=\"396\"/><span>Author created with data from Seeking Alpha</span></p><p>GRAB had a negative net income in every quarter of 2022 and the net income it announced each quarter was an average of -420 million. In 2023, the company announced a positive net income once in the last quarter and the average net income of the quarters increased to -108 million. In 2024, GRAB, which announced a positive net income in the 3rd quarter, is currently at a loss with an average of -43 million in 2023 net income, although I predict that the company has a very high potential to announce a positive net income in the 4th quarter due to the change in the company strategy and their complete focus on profitability.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/b3b162a6f461a25528a41531b2104067\" alt=\"Author created with data from Seeking Alpha\" title=\"Author created with data from Seeking Alpha\" tg-width=\"640\" tg-height=\"396\"/><span>Author created with data from Seeking Alpha</span></p><p>Therefore, the company is now starting to turn from a financial loss to a profit. So what is the economic situation?</p><h2 id=\"id_805086888\">Economic Profit Analysis</h2><p>Since the company is in the development phase, I do not think that comparing the valuation ratios with their substitutes will give a sufficiently healthy result. Therefore, I have to skip this step in this analysis, which I do in every analysis. But I want to do the economic profitability analysis.</p><p>Some of you know, some of you don&#39;t, profitability analysis, unlike financial profitability, is the normalization of the company&#39;s profitability according to risk-free instruments by calculating the ROIC and WACC of the stock, namely the Weighted Average Cost of Capital.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/e2d2cecdc93e4f2c873c65d14b09215c\" alt=\"Author created with data from TradingView\" title=\"Author created with data from TradingView\" tg-width=\"640\" tg-height=\"396\"/><span>Author created with data from TradingView</span></p><p>When I did GRAB&#39;s economic profitability analysis since 2021, the first thing that caught my attention was that the company&#39;s WACC did not change significantly. Historically, the company&#39;s WACC value has been around the average of -8.61%. WACC is the average rate that the company is expected to pay to all shareholders to finance its assets. A negative WACC value means that the company has to receive $0.86 from shareholders for every dollar it finances. Since it is not a single determining factor, the economic profitability calculation is made by taking ROIC into account.</p><p>While WACC remains stagnant, ROIC&#39;s approaching positiveness starting from the second quarter of 2022 is a very good sign. I have also shown in my previous CEG and GASS analyses that significant increases in stock prices are experienced in quarters where economic profitability is positive. Therefore, I think it would not be surprising for me to be on the buying side of a stock that has a negative economic profitability and where this economic profitability is on a positive trend day by day.</p><h2 id=\"id_2842599198\">Technical Analysis</h2><p>Technically, analyzing GRAB will allow us to determine the ideal buying and correction areas more sharply. When doing technical analysis, I will use the price action method and the RSI indicator in particular.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/4716f9dd4e98157679395c3d2ba23cce\" alt=\"TradingView\" title=\"TradingView\" tg-width=\"640\" tg-height=\"323\"/><span>TradingView</span></p><p>In the weekly time frame, GRAB started its run in August 2024 and saw the $5.72 level in the last quarter of 2024. I detected that an order block was created at this level, especially in 2022. Therefore, the $5.50–6 range seems to be a difficult resistance for GRAB to break. GRAB has been making the expected corrections since that day. I predict that this correction will be up to the $4 level and that this level, which was previously a resistance level, will be used as a support. I can also support this prediction with the Fibonacci correction tool. When the Fibonacci correction is applied to the run that started in August, the 0.5–0.618 region corresponds exactly to the $4 support.</p><p>When GRAB reaches this support, the RSI will also be around 50. Considering that the RSI has not dropped to 30 except for GRAB&#39;s historic decline in 2022, I can say that this level will be a very solid support level.</p><p>After holding on to the support, the scenario for GRAB will turn into a bull run again. My first short-term target in this run is $6. I can clearly say that if the economic and financial profitability is provided to investors who will hold it for the long term, the stock can see the IPO price again.</p><h2 id=\"id_1389935016\">Risks and Challenges</h2><p>We write this section for every stock, but when it comes to GRAB, this section becomes much more valuable. The risks of new companies are always much more greater than the risks of mature companies. So I need to tell my readers that this company is a new and developing company. When it comes to the risks regarding competition, I think that GRAB&#39;s competition with companies such as Foodpanda and Gojek, especially in the region where it operates, should be closely monitored. If GRAB falls behind in this competition, its margins may decrease. In addition, the company&#39;s increased customer acquisition costs are another factor that can narrow margins. The company&#39;s operation in the fintech sector also means that the company is slightly more exposed to financial risks than normal in a macro economically challenging environment such as Southeast Asia.</p><h2 id=\"id_2278206712\">Conclusion</h2><p>As a result, GRAB is a company that is in financial loss like every new and developing company. However, this does not prevent the company from walking towards profitability in a stable manner. In addition to its financial and economic promise, its business developments are also very positive. Technical indicators show that GRAB, which is in the correction process, is approaching the buy level. As long as the company stabilizes its margins and provides sustainable profitability, I will continue to maintain my &#34;buy&#34; position.</p></body></html>","source":"lsy1728464409321","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Grab Holdings: Turning The Tide With Profitability Indicates A Buy</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nGrab Holdings: Turning The Tide With Profitability Indicates A Buy\n</h2>\n\n<h4 class=\"meta\">\n\n\n2025-01-13 15:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4749011-grab-holdings-stock-turning-the-tide-with-profitability-indicates-buy><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryGrab Holdings' shift from 'growth-at-all-costs' to a focus on profitability, operational efficiency, and strategic business developments has driven its stock price recovery.The company's ...</p>\n\n<a href=\"https://seekingalpha.com/article/4749011-grab-holdings-stock-turning-the-tide-with-profitability-indicates-buy\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"GRAB":"Grab Holdings"},"source_url":"https://seekingalpha.com/article/4749011-grab-holdings-stock-turning-the-tide-with-profitability-indicates-buy","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1130058726","content_text":"SummaryGrab Holdings' shift from 'growth-at-all-costs' to a focus on profitability, operational efficiency, and strategic business developments has driven its stock price recovery.The company's diversified services and expansion into financial services, coupled with a successful share buyback program, demonstrate strong growth potential.Positive financial trends, including revenue growth and improving net income, signal a promising future despite past losses and challenging macroeconomic conditions.Technical analysis indicates a solid support level at $4, suggesting a potential bull run with a short-term target of $6, making GRAB a 'Buy.'tupungatoFrom the end of 2021 to the middle of 2022, Grab Holdings Limited (NASDAQ:GRAB) dropped 86% to $2.26 and was unable to rise above $4 for about two and a half years. But company started to reverse this bad fate by running to $5.70 by the end of 2024. In this article, I will explain in detail how GRAB reversed this fate and therefore why I maintain a \"buy\" position.GRAB is a Southeast Asia-based app that provides multiple services on a single platform. The company has a GrabCar division that offers a service kind of UBER, a Grabfood division that offers food delivery services like DoorDash, and a GrabExpress division that offers classic cargo services. In addition, the app has also branched out into financial services with the GrabPay payment system. Is it over? No. The company also has a service where you can book hotels.Business DevelopmentsBeing a company that operates in so many areas has many advantages and disadvantages. Yes, the company's income sources are diversified, but at the same time, it becomes more difficult to maintain customer satisfaction and service quality at a certain level. Yes, since the company is involved in so many sectors, the company's risk decreases in a sense due to diversification, but at the same time, operational expenses increase.Well, in the introduction, I said that the company's shares experienced a serious decline in 2022. What was the reason for this and can such a decline occur again? First of all, it is not possible to attribute this decline to a single reason. As we all experienced, there was a pandemic wave during this period. The slowdown in growth in the food distribution sector was a big factor after this pandemic. Then the company's income fell by more than 500 basis points due to the fluctuations in foreign exchange. In addition, the company already had a natural operational expense. This operational expense was higher than normal due to R&D since it was a new company. These increased capital investment requirements to the highest level and high marketing costs also strained profits. Rising inflation and interest rates also created very negative macroeconomic conditions for the company.Therefore, GRAB opened its eyes in an extremely negative global and macroeconomic environment. This caused the company's shares to fall 80% below their IPO price. So what happened that GRAB broke the $4 resistance again after years and ran to $5.70, and now I am on the buying side for the stock?First of all, I need to touch on the company's business developments. In the last quarter, the company's monthly transaction users reached 42 million. 42 million indicates a 19% growth year-on-year. In addition, the company's on-demand gross merchandise value increased by 15% year-on-year to $4.7 billion. I mentioned in the previous paragraphs that GRAB is a digital banking application. The deposits of this digital banking application increased threefold and on top of that, the company's loan portfolio increased by 81%.The company's business developments and growth were effective in this price increase, but GRAB also made minor changes to its strategy. The company's focus from the beginning was \"growth-at-all-costs\", but now the company has shifted this focus to \"profitability\". Let me explain what this change means. The company is now trying to maximize operational efficiency by cutting unnecessary expenses. We have already seen the effects of this in the last quarter financials. I will touch on this in the next paragraphs. In addition to these, the company completed its share buyback program and showed investors that it trusts the business.These reasons I mentioned caused the stock to enter a bull run in the second half of 2024 and reach $5.70. So what are GRAB's business development plans for 2025?GRAB will focus on providing premium products to its customers in 2024, with the strength it gets from the growth of its \"Saver\" tier. While doing this, the company will further develop its advertising business. In the past period, we have seen a 46% year-on-year growth in the company's active advertisers, so this is a full promise. In addition, like every company, GRAB will continue to invest in AI and data analysis to increase operational efficiency.It is said that the company will focus on deepening its market penetration in Southeast Asia. Considering that the company currently only holds 4% of the estimated $375 billion total addressable market, this shows that the company has significant growth potential. The company also projects a 12% CAGR for gross merchandise value from 2023 to 2026 and plans to balance premium and value products to stabilize margins.I have touched on its financials a bit, but I need to analyze it quantitatively to fully paint the picture for the upcoming quarters.FinancialsGRAB reported $716 million in revenue in the last quarter. This means that revenue grew by 16.42% year-over-year. The company's revenue has been growing steadily since 2022 and the growth has been slowing down year-over-year.Author created with data from Seeking AlphaNormally, I would provide a forecast for future growth by averaging the growth from year to year and analyzing seasonality, but that is impossible to do here. However, it is clear that the change from year to year is in an exponential downtrend. Therefore, based on exponential regression, it would be logical to expect a 10.57% YOY increase next quarter. This means that revenues will be around $722 million next quarter. Historically, it is most logical to expect revenues to increase next quarter in any case.Author created with data from Seeking AlphaHowever, no matter how much revenues continue to grow, how net income behaves during this process is much more important. Net margin, like every new company, was in the negative for a while after it was founded. This is a perfectly acceptable view, since the company eventually poured a significant amount of money into R&D. What I pay attention to here is that net income is in a slowly increasing trend.Author created with data from Seeking AlphaGRAB had a negative net income in every quarter of 2022 and the net income it announced each quarter was an average of -420 million. In 2023, the company announced a positive net income once in the last quarter and the average net income of the quarters increased to -108 million. In 2024, GRAB, which announced a positive net income in the 3rd quarter, is currently at a loss with an average of -43 million in 2023 net income, although I predict that the company has a very high potential to announce a positive net income in the 4th quarter due to the change in the company strategy and their complete focus on profitability.Author created with data from Seeking AlphaTherefore, the company is now starting to turn from a financial loss to a profit. So what is the economic situation?Economic Profit AnalysisSince the company is in the development phase, I do not think that comparing the valuation ratios with their substitutes will give a sufficiently healthy result. Therefore, I have to skip this step in this analysis, which I do in every analysis. But I want to do the economic profitability analysis.Some of you know, some of you don't, profitability analysis, unlike financial profitability, is the normalization of the company's profitability according to risk-free instruments by calculating the ROIC and WACC of the stock, namely the Weighted Average Cost of Capital.Author created with data from TradingViewWhen I did GRAB's economic profitability analysis since 2021, the first thing that caught my attention was that the company's WACC did not change significantly. Historically, the company's WACC value has been around the average of -8.61%. WACC is the average rate that the company is expected to pay to all shareholders to finance its assets. A negative WACC value means that the company has to receive $0.86 from shareholders for every dollar it finances. Since it is not a single determining factor, the economic profitability calculation is made by taking ROIC into account.While WACC remains stagnant, ROIC's approaching positiveness starting from the second quarter of 2022 is a very good sign. I have also shown in my previous CEG and GASS analyses that significant increases in stock prices are experienced in quarters where economic profitability is positive. Therefore, I think it would not be surprising for me to be on the buying side of a stock that has a negative economic profitability and where this economic profitability is on a positive trend day by day.Technical AnalysisTechnically, analyzing GRAB will allow us to determine the ideal buying and correction areas more sharply. When doing technical analysis, I will use the price action method and the RSI indicator in particular.TradingViewIn the weekly time frame, GRAB started its run in August 2024 and saw the $5.72 level in the last quarter of 2024. I detected that an order block was created at this level, especially in 2022. Therefore, the $5.50–6 range seems to be a difficult resistance for GRAB to break. GRAB has been making the expected corrections since that day. I predict that this correction will be up to the $4 level and that this level, which was previously a resistance level, will be used as a support. I can also support this prediction with the Fibonacci correction tool. When the Fibonacci correction is applied to the run that started in August, the 0.5–0.618 region corresponds exactly to the $4 support.When GRAB reaches this support, the RSI will also be around 50. Considering that the RSI has not dropped to 30 except for GRAB's historic decline in 2022, I can say that this level will be a very solid support level.After holding on to the support, the scenario for GRAB will turn into a bull run again. My first short-term target in this run is $6. I can clearly say that if the economic and financial profitability is provided to investors who will hold it for the long term, the stock can see the IPO price again.Risks and ChallengesWe write this section for every stock, but when it comes to GRAB, this section becomes much more valuable. The risks of new companies are always much more greater than the risks of mature companies. So I need to tell my readers that this company is a new and developing company. When it comes to the risks regarding competition, I think that GRAB's competition with companies such as Foodpanda and Gojek, especially in the region where it operates, should be closely monitored. If GRAB falls behind in this competition, its margins may decrease. In addition, the company's increased customer acquisition costs are another factor that can narrow margins. The company's operation in the fintech sector also means that the company is slightly more exposed to financial risks than normal in a macro economically challenging environment such as Southeast Asia.ConclusionAs a result, GRAB is a company that is in financial loss like every new and developing company. However, this does not prevent the company from walking towards profitability in a stable manner. In addition to its financial and economic promise, its business developments are also very positive. Technical indicators show that GRAB, which is in the correction process, is approaching the buy level. As long as the company stabilizes its margins and provides sustainable profitability, I will continue to maintain my \"buy\" position.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":392188532707552,"gmtCreate":1736792402979,"gmtModify":1736792407792,"author":{"id":"3569739151630202","authorId":"3569739151630202","name":"Madluvyz","avatar":"https://community-static.tradeup.com/news/bb30e83c3d8123d66b5adbf1af552e9d","vip":1,"hat":"https://static.tigerbbs.com/4c5ceab71416b120bab4604c0754b52a","crmLevel":7,"crmLevelSwitch":1,"idStr":"3569739151630202","authorIdStr":"3569739151630202"},"htmlText":"Great detailed analysis on the argument for upside view on GRAB. Used to hold this stock when it IPO, but cut loss eventually.&nbsp; After reading your article, I might explore on taking a position on it again. Cheers!~","listText":"Great detailed analysis on the argument for upside view on GRAB. Used to hold this stock when it IPO, but cut loss eventually.&nbsp; After reading your article, I might explore on taking a position on it again. Cheers!~","text":"Great detailed analysis on the argument for upside view on GRAB. Used to hold this stock when it IPO, but cut loss eventually. After reading your article, I might explore on taking a position on it again. Cheers!~","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/392188532707552","repostId":1130058726,"repostType":4,"repost":{"id":"1130058726","kind":"news","pubTimestamp":1736753400,"share":"https://ttm.financial/m/news/1130058726?lang=&edition=fundamental","pubTime":"2025-01-13 15:30","market":"us","language":"en","title":"Grab Holdings: Turning The Tide With Profitability Indicates A Buy","url":"https://stock-news.laohu8.com/highlight/detail?id=1130058726","media":"Seeking Alpha","summary":"First of all, it is not possible to attribute this decline to a single reason. As we all experienced, there was a pandemic wave during this period. The slowdown in growth in the food distribution sector was a big factor after this pandemic. Then the company's income fell by more than 500 basis points due to the fluctuations in foreign exchange. In addition, the company already had a natural operational expense. This operational expense was higher than normal due to R&D since it was a new company","content":"<html><head></head><body><h2 id=\"id_4223372060\">Summary</h2><ul style=\"\"><li><p>Grab Holdings&#39; shift from &#39;growth-at-all-costs&#39; to a focus on profitability, operational efficiency, and strategic business developments has driven its stock price recovery.</p></li><li><p>The company&#39;s diversified services and expansion into financial services, coupled with a successful share buyback program, demonstrate strong growth potential.</p></li><li><p>Positive financial trends, including revenue growth and improving net income, signal a promising future despite past losses and challenging macroeconomic conditions.</p></li><li><p>Technical analysis indicates a solid support level at $4, suggesting a potential bull run with a short-term target of $6, making GRAB a &#39;Buy.&#39;</p></li></ul><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/6b37808aab461b958c58f017e3818257\" alt=\"tupungato\" title=\"tupungato\" tg-width=\"750\" tg-height=\"500\"/><span>tupungato</span></p><p>From the end of 2021 to the middle of 2022, Grab Holdings Limited (NASDAQ:GRAB) dropped 86% to $2.26 and was unable to rise above $4 for about two and a half years. But company started to reverse this bad fate by running to $5.70 by the end of 2024. In this article, I will explain in detail how GRAB reversed this fate and therefore why I maintain a &#34;buy&#34; position.</p><p>GRAB is a Southeast Asia-based app that provides multiple services on a single platform. The company has a GrabCar division that offers a service kind of UBER, a Grabfood division that offers food delivery services like DoorDash, and a GrabExpress division that offers classic cargo services. In addition, the app has also branched out into financial services with the GrabPay payment system. Is it over? No. The company also has a service where you can book hotels.</p><h2 id=\"id_1916277783\">Business Developments</h2><p>Being a company that operates in so many areas has many advantages and disadvantages. Yes, the company&#39;s income sources are diversified, but at the same time, it becomes more difficult to maintain customer satisfaction and service quality at a certain level. Yes, since the company is involved in so many sectors, the company&#39;s risk decreases in a sense due to diversification, but at the same time, operational expenses increase.</p><p>Well, in the introduction, I said that the company&#39;s shares experienced a serious decline in 2022. What was the reason for this and can such a decline occur again? First of all, it is not possible to attribute this decline to a single reason. As we all experienced, there was a pandemic wave during this period. The slowdown in growth in the food distribution sector was a big factor after this pandemic. Then the company&#39;s income fell by more than 500 basis points due to the fluctuations in foreign exchange. In addition, the company already had a natural operational expense. This operational expense was higher than normal due to R&amp;D since it was a new company. These increased capital investment requirements to the highest level and high marketing costs also strained profits. Rising inflation and interest rates also created very negative macroeconomic conditions for the company.</p><p>Therefore, GRAB opened its eyes in an extremely negative global and macroeconomic environment. This caused the company&#39;s shares to fall 80% below their IPO price. So what happened that GRAB broke the $4 resistance again after years and ran to $5.70, and now I am on the buying side for the stock?</p><p>First of all, I need to touch on the company&#39;s business developments. In the last quarter, the company&#39;s monthly transaction users reached 42 million. 42 million indicates a 19% growth year-on-year. In addition, the company&#39;s on-demand gross merchandise value increased by 15% year-on-year to $4.7 billion. I mentioned in the previous paragraphs that GRAB is a digital banking application. The deposits of this digital banking application increased threefold and on top of that, the company&#39;s loan portfolio increased by 81%.</p><p>The company&#39;s business developments and growth were effective in this price increase, but GRAB also made minor changes to its strategy. The company&#39;s focus from the beginning was &#34;growth-at-all-costs&#34;, but now the company has shifted this focus to &#34;profitability&#34;. Let me explain what this change means. The company is now trying to maximize operational efficiency by cutting unnecessary expenses. We have already seen the effects of this in the last quarter financials. I will touch on this in the next paragraphs. In addition to these, the company completed its share buyback program and showed investors that it trusts the business.</p><p>These reasons I mentioned caused the stock to enter a bull run in the second half of 2024 and reach $5.70. So what are GRAB&#39;s business development plans for 2025?</p><p>GRAB will focus on providing premium products to its customers in 2024, with the strength it gets from the growth of its &#34;Saver&#34; tier. While doing this, the company will further develop its advertising business. In the past period, we have seen a 46% year-on-year growth in the company&#39;s active advertisers, so this is a full promise. In addition, like every company, GRAB will continue to invest in AI and data analysis to increase operational efficiency.</p><p>It is said that the company will focus on deepening its market penetration in Southeast Asia. Considering that the company currently only holds 4% of the estimated $375 billion total addressable market, this shows that the company has significant growth potential. The company also projects a 12% CAGR for gross merchandise value from 2023 to 2026 and plans to balance premium and value products to stabilize margins.</p><p>I have touched on its financials a bit, but I need to analyze it quantitatively to fully paint the picture for the upcoming quarters.</p><h2 id=\"id_156587777\">Financials</h2><p>GRAB reported $716 million in revenue in the last quarter. This means that revenue grew by 16.42% year-over-year. The company&#39;s revenue has been growing steadily since 2022 and the growth has been slowing down year-over-year.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/7681309f1a58201fa505779037b1b3aa\" alt=\"Author created with data from Seeking Alpha\" title=\"Author created with data from Seeking Alpha\" tg-width=\"640\" tg-height=\"396\"/><span>Author created with data from Seeking Alpha</span></p><p>Normally, I would provide a forecast for future growth by averaging the growth from year to year and analyzing seasonality, but that is impossible to do here. However, it is clear that the change from year to year is in an exponential downtrend. Therefore, based on exponential regression, it would be logical to expect a 10.57% YOY increase next quarter. This means that revenues will be around $722 million next quarter. Historically, it is most logical to expect revenues to increase next quarter in any case.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/977f8578f04539e91dbe4733ad7349f6\" alt=\"Author created with data from Seeking Alpha\" title=\"Author created with data from Seeking Alpha\" tg-width=\"640\" tg-height=\"396\"/><span>Author created with data from Seeking Alpha</span></p><p>However, no matter how much revenues continue to grow, how net income behaves during this process is much more important. Net margin, like every new company, was in the negative for a while after it was founded. This is a perfectly acceptable view, since the company eventually poured a significant amount of money into R&amp;D. What I pay attention to here is that net income is in a slowly increasing trend.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/a2bf3c8fb2be3cc6bed8d6bc17ee0d54\" alt=\"Author created with data from Seeking Alpha\" title=\"Author created with data from Seeking Alpha\" tg-width=\"640\" tg-height=\"396\"/><span>Author created with data from Seeking Alpha</span></p><p>GRAB had a negative net income in every quarter of 2022 and the net income it announced each quarter was an average of -420 million. In 2023, the company announced a positive net income once in the last quarter and the average net income of the quarters increased to -108 million. In 2024, GRAB, which announced a positive net income in the 3rd quarter, is currently at a loss with an average of -43 million in 2023 net income, although I predict that the company has a very high potential to announce a positive net income in the 4th quarter due to the change in the company strategy and their complete focus on profitability.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/b3b162a6f461a25528a41531b2104067\" alt=\"Author created with data from Seeking Alpha\" title=\"Author created with data from Seeking Alpha\" tg-width=\"640\" tg-height=\"396\"/><span>Author created with data from Seeking Alpha</span></p><p>Therefore, the company is now starting to turn from a financial loss to a profit. So what is the economic situation?</p><h2 id=\"id_805086888\">Economic Profit Analysis</h2><p>Since the company is in the development phase, I do not think that comparing the valuation ratios with their substitutes will give a sufficiently healthy result. Therefore, I have to skip this step in this analysis, which I do in every analysis. But I want to do the economic profitability analysis.</p><p>Some of you know, some of you don&#39;t, profitability analysis, unlike financial profitability, is the normalization of the company&#39;s profitability according to risk-free instruments by calculating the ROIC and WACC of the stock, namely the Weighted Average Cost of Capital.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/e2d2cecdc93e4f2c873c65d14b09215c\" alt=\"Author created with data from TradingView\" title=\"Author created with data from TradingView\" tg-width=\"640\" tg-height=\"396\"/><span>Author created with data from TradingView</span></p><p>When I did GRAB&#39;s economic profitability analysis since 2021, the first thing that caught my attention was that the company&#39;s WACC did not change significantly. Historically, the company&#39;s WACC value has been around the average of -8.61%. WACC is the average rate that the company is expected to pay to all shareholders to finance its assets. A negative WACC value means that the company has to receive $0.86 from shareholders for every dollar it finances. Since it is not a single determining factor, the economic profitability calculation is made by taking ROIC into account.</p><p>While WACC remains stagnant, ROIC&#39;s approaching positiveness starting from the second quarter of 2022 is a very good sign. I have also shown in my previous CEG and GASS analyses that significant increases in stock prices are experienced in quarters where economic profitability is positive. Therefore, I think it would not be surprising for me to be on the buying side of a stock that has a negative economic profitability and where this economic profitability is on a positive trend day by day.</p><h2 id=\"id_2842599198\">Technical Analysis</h2><p>Technically, analyzing GRAB will allow us to determine the ideal buying and correction areas more sharply. When doing technical analysis, I will use the price action method and the RSI indicator in particular.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/4716f9dd4e98157679395c3d2ba23cce\" alt=\"TradingView\" title=\"TradingView\" tg-width=\"640\" tg-height=\"323\"/><span>TradingView</span></p><p>In the weekly time frame, GRAB started its run in August 2024 and saw the $5.72 level in the last quarter of 2024. I detected that an order block was created at this level, especially in 2022. Therefore, the $5.50–6 range seems to be a difficult resistance for GRAB to break. GRAB has been making the expected corrections since that day. I predict that this correction will be up to the $4 level and that this level, which was previously a resistance level, will be used as a support. I can also support this prediction with the Fibonacci correction tool. When the Fibonacci correction is applied to the run that started in August, the 0.5–0.618 region corresponds exactly to the $4 support.</p><p>When GRAB reaches this support, the RSI will also be around 50. Considering that the RSI has not dropped to 30 except for GRAB&#39;s historic decline in 2022, I can say that this level will be a very solid support level.</p><p>After holding on to the support, the scenario for GRAB will turn into a bull run again. My first short-term target in this run is $6. I can clearly say that if the economic and financial profitability is provided to investors who will hold it for the long term, the stock can see the IPO price again.</p><h2 id=\"id_1389935016\">Risks and Challenges</h2><p>We write this section for every stock, but when it comes to GRAB, this section becomes much more valuable. The risks of new companies are always much more greater than the risks of mature companies. So I need to tell my readers that this company is a new and developing company. When it comes to the risks regarding competition, I think that GRAB&#39;s competition with companies such as Foodpanda and Gojek, especially in the region where it operates, should be closely monitored. If GRAB falls behind in this competition, its margins may decrease. In addition, the company&#39;s increased customer acquisition costs are another factor that can narrow margins. The company&#39;s operation in the fintech sector also means that the company is slightly more exposed to financial risks than normal in a macro economically challenging environment such as Southeast Asia.</p><h2 id=\"id_2278206712\">Conclusion</h2><p>As a result, GRAB is a company that is in financial loss like every new and developing company. However, this does not prevent the company from walking towards profitability in a stable manner. In addition to its financial and economic promise, its business developments are also very positive. Technical indicators show that GRAB, which is in the correction process, is approaching the buy level. As long as the company stabilizes its margins and provides sustainable profitability, I will continue to maintain my &#34;buy&#34; position.</p></body></html>","source":"lsy1728464409321","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Grab Holdings: Turning The Tide With Profitability Indicates A Buy</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nGrab Holdings: Turning The Tide With Profitability Indicates A Buy\n</h2>\n\n<h4 class=\"meta\">\n\n\n2025-01-13 15:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4749011-grab-holdings-stock-turning-the-tide-with-profitability-indicates-buy><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryGrab Holdings' shift from 'growth-at-all-costs' to a focus on profitability, operational efficiency, and strategic business developments has driven its stock price recovery.The company's ...</p>\n\n<a href=\"https://seekingalpha.com/article/4749011-grab-holdings-stock-turning-the-tide-with-profitability-indicates-buy\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"GRAB":"Grab Holdings"},"source_url":"https://seekingalpha.com/article/4749011-grab-holdings-stock-turning-the-tide-with-profitability-indicates-buy","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1130058726","content_text":"SummaryGrab Holdings' shift from 'growth-at-all-costs' to a focus on profitability, operational efficiency, and strategic business developments has driven its stock price recovery.The company's diversified services and expansion into financial services, coupled with a successful share buyback program, demonstrate strong growth potential.Positive financial trends, including revenue growth and improving net income, signal a promising future despite past losses and challenging macroeconomic conditions.Technical analysis indicates a solid support level at $4, suggesting a potential bull run with a short-term target of $6, making GRAB a 'Buy.'tupungatoFrom the end of 2021 to the middle of 2022, Grab Holdings Limited (NASDAQ:GRAB) dropped 86% to $2.26 and was unable to rise above $4 for about two and a half years. But company started to reverse this bad fate by running to $5.70 by the end of 2024. In this article, I will explain in detail how GRAB reversed this fate and therefore why I maintain a \"buy\" position.GRAB is a Southeast Asia-based app that provides multiple services on a single platform. The company has a GrabCar division that offers a service kind of UBER, a Grabfood division that offers food delivery services like DoorDash, and a GrabExpress division that offers classic cargo services. In addition, the app has also branched out into financial services with the GrabPay payment system. Is it over? No. The company also has a service where you can book hotels.Business DevelopmentsBeing a company that operates in so many areas has many advantages and disadvantages. Yes, the company's income sources are diversified, but at the same time, it becomes more difficult to maintain customer satisfaction and service quality at a certain level. Yes, since the company is involved in so many sectors, the company's risk decreases in a sense due to diversification, but at the same time, operational expenses increase.Well, in the introduction, I said that the company's shares experienced a serious decline in 2022. What was the reason for this and can such a decline occur again? First of all, it is not possible to attribute this decline to a single reason. As we all experienced, there was a pandemic wave during this period. The slowdown in growth in the food distribution sector was a big factor after this pandemic. Then the company's income fell by more than 500 basis points due to the fluctuations in foreign exchange. In addition, the company already had a natural operational expense. This operational expense was higher than normal due to R&D since it was a new company. These increased capital investment requirements to the highest level and high marketing costs also strained profits. Rising inflation and interest rates also created very negative macroeconomic conditions for the company.Therefore, GRAB opened its eyes in an extremely negative global and macroeconomic environment. This caused the company's shares to fall 80% below their IPO price. So what happened that GRAB broke the $4 resistance again after years and ran to $5.70, and now I am on the buying side for the stock?First of all, I need to touch on the company's business developments. In the last quarter, the company's monthly transaction users reached 42 million. 42 million indicates a 19% growth year-on-year. In addition, the company's on-demand gross merchandise value increased by 15% year-on-year to $4.7 billion. I mentioned in the previous paragraphs that GRAB is a digital banking application. The deposits of this digital banking application increased threefold and on top of that, the company's loan portfolio increased by 81%.The company's business developments and growth were effective in this price increase, but GRAB also made minor changes to its strategy. The company's focus from the beginning was \"growth-at-all-costs\", but now the company has shifted this focus to \"profitability\". Let me explain what this change means. The company is now trying to maximize operational efficiency by cutting unnecessary expenses. We have already seen the effects of this in the last quarter financials. I will touch on this in the next paragraphs. In addition to these, the company completed its share buyback program and showed investors that it trusts the business.These reasons I mentioned caused the stock to enter a bull run in the second half of 2024 and reach $5.70. So what are GRAB's business development plans for 2025?GRAB will focus on providing premium products to its customers in 2024, with the strength it gets from the growth of its \"Saver\" tier. While doing this, the company will further develop its advertising business. In the past period, we have seen a 46% year-on-year growth in the company's active advertisers, so this is a full promise. In addition, like every company, GRAB will continue to invest in AI and data analysis to increase operational efficiency.It is said that the company will focus on deepening its market penetration in Southeast Asia. Considering that the company currently only holds 4% of the estimated $375 billion total addressable market, this shows that the company has significant growth potential. The company also projects a 12% CAGR for gross merchandise value from 2023 to 2026 and plans to balance premium and value products to stabilize margins.I have touched on its financials a bit, but I need to analyze it quantitatively to fully paint the picture for the upcoming quarters.FinancialsGRAB reported $716 million in revenue in the last quarter. This means that revenue grew by 16.42% year-over-year. The company's revenue has been growing steadily since 2022 and the growth has been slowing down year-over-year.Author created with data from Seeking AlphaNormally, I would provide a forecast for future growth by averaging the growth from year to year and analyzing seasonality, but that is impossible to do here. However, it is clear that the change from year to year is in an exponential downtrend. Therefore, based on exponential regression, it would be logical to expect a 10.57% YOY increase next quarter. This means that revenues will be around $722 million next quarter. Historically, it is most logical to expect revenues to increase next quarter in any case.Author created with data from Seeking AlphaHowever, no matter how much revenues continue to grow, how net income behaves during this process is much more important. Net margin, like every new company, was in the negative for a while after it was founded. This is a perfectly acceptable view, since the company eventually poured a significant amount of money into R&D. What I pay attention to here is that net income is in a slowly increasing trend.Author created with data from Seeking AlphaGRAB had a negative net income in every quarter of 2022 and the net income it announced each quarter was an average of -420 million. In 2023, the company announced a positive net income once in the last quarter and the average net income of the quarters increased to -108 million. In 2024, GRAB, which announced a positive net income in the 3rd quarter, is currently at a loss with an average of -43 million in 2023 net income, although I predict that the company has a very high potential to announce a positive net income in the 4th quarter due to the change in the company strategy and their complete focus on profitability.Author created with data from Seeking AlphaTherefore, the company is now starting to turn from a financial loss to a profit. So what is the economic situation?Economic Profit AnalysisSince the company is in the development phase, I do not think that comparing the valuation ratios with their substitutes will give a sufficiently healthy result. Therefore, I have to skip this step in this analysis, which I do in every analysis. But I want to do the economic profitability analysis.Some of you know, some of you don't, profitability analysis, unlike financial profitability, is the normalization of the company's profitability according to risk-free instruments by calculating the ROIC and WACC of the stock, namely the Weighted Average Cost of Capital.Author created with data from TradingViewWhen I did GRAB's economic profitability analysis since 2021, the first thing that caught my attention was that the company's WACC did not change significantly. Historically, the company's WACC value has been around the average of -8.61%. WACC is the average rate that the company is expected to pay to all shareholders to finance its assets. A negative WACC value means that the company has to receive $0.86 from shareholders for every dollar it finances. Since it is not a single determining factor, the economic profitability calculation is made by taking ROIC into account.While WACC remains stagnant, ROIC's approaching positiveness starting from the second quarter of 2022 is a very good sign. I have also shown in my previous CEG and GASS analyses that significant increases in stock prices are experienced in quarters where economic profitability is positive. Therefore, I think it would not be surprising for me to be on the buying side of a stock that has a negative economic profitability and where this economic profitability is on a positive trend day by day.Technical AnalysisTechnically, analyzing GRAB will allow us to determine the ideal buying and correction areas more sharply. When doing technical analysis, I will use the price action method and the RSI indicator in particular.TradingViewIn the weekly time frame, GRAB started its run in August 2024 and saw the $5.72 level in the last quarter of 2024. I detected that an order block was created at this level, especially in 2022. Therefore, the $5.50–6 range seems to be a difficult resistance for GRAB to break. GRAB has been making the expected corrections since that day. I predict that this correction will be up to the $4 level and that this level, which was previously a resistance level, will be used as a support. I can also support this prediction with the Fibonacci correction tool. When the Fibonacci correction is applied to the run that started in August, the 0.5–0.618 region corresponds exactly to the $4 support.When GRAB reaches this support, the RSI will also be around 50. Considering that the RSI has not dropped to 30 except for GRAB's historic decline in 2022, I can say that this level will be a very solid support level.After holding on to the support, the scenario for GRAB will turn into a bull run again. My first short-term target in this run is $6. I can clearly say that if the economic and financial profitability is provided to investors who will hold it for the long term, the stock can see the IPO price again.Risks and ChallengesWe write this section for every stock, but when it comes to GRAB, this section becomes much more valuable. The risks of new companies are always much more greater than the risks of mature companies. So I need to tell my readers that this company is a new and developing company. When it comes to the risks regarding competition, I think that GRAB's competition with companies such as Foodpanda and Gojek, especially in the region where it operates, should be closely monitored. If GRAB falls behind in this competition, its margins may decrease. In addition, the company's increased customer acquisition costs are another factor that can narrow margins. The company's operation in the fintech sector also means that the company is slightly more exposed to financial risks than normal in a macro economically challenging environment such as Southeast Asia.ConclusionAs a result, GRAB is a company that is in financial loss like every new and developing company. However, this does not prevent the company from walking towards profitability in a stable manner. In addition to its financial and economic promise, its business developments are also very positive. Technical indicators show that GRAB, which is in the correction process, is approaching the buy level. As long as the company stabilizes its margins and provides sustainable profitability, I will continue to maintain my \"buy\" position.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":18,"commentSize":2,"repostSize":0,"favoriteSize":2,"likeStatus":false,"favoriteStatus":false}}