ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

In Equity Sales and Research for more than 25 years covering Asian markets. Possesses in-depth knowledge of a wide range of companies, economies, and markets in Asia. Over his career, he has specialised in HK/China and ASEAN markets at various different Investment Banks, most recently heading equities in Indonesia for Bank of America Merrill Lynch in Jakarta for more than three years. Whilst in Jakarta, he produced a well-read daily and weekly product on the Indonesian market, which included company visits, as well as political, economic and sector commentary. A former racing skier, who enjoys ultra-marathons and surfing in his spare time.

ASEAN Insight Provider

The Week That Was in ASEAN@Smartkarma - Supercharged Sea Ltd, Grab's Risks, and Telkom Transforming

The Week That Was in ASEAN@Smartkarma - Link Net, KBANK, and Grab's Delay

The Rising Tide of Digital IPOs and M&A in SE Asia's Digital Game of Thrones

Grab - Biting the Bullet with a SPAC Listing?

Gravity Works As WeWork Doesn't; Now Plan B

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Private Capital Markets

<p>Looking at the reports in the press on the news that <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab</a> will seek a listing through an Altimeter Capital SPAC, there seems to be nothing but euphoria, without very much commentary on the potential risks ahead to the company's bullish forecasts and relatively high valuations. </p>
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<p>In terms of profitability, <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab</a> maintains that ride-hailing was EBITDA positive in 4Q2019 but the company still lost US$800m in 2020.</p>
<p><a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab</a>'s projections are quite long-dated in the face of increasing and very unpredictable competitive pressures from the other major digital players, more especially the newly merged <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek</a> and <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia</a> under "GoTo Group" and from Shopee (<a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a>). </p>
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<p>The delivery and mobility take-rate assumptions also look quite high given the potential for heavy promotional activity from major competitors.</p>
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<p>In the company's presentation, there are three pages of detailed "Risk Factors Relating to Grab" in a small font covering a lot of bases, and leaving plenty of room for disappointment.</p>
<p>Our main concern would be the strong competition from Shopee on digital payments plus its move into food delivery in Indonesia under ShopeeFood.  It is also possible OVO stands to lose a good deal of business to GoPay with the merger moving ahead. </p>
<p>We also see the combined force of <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek</a> and <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia</a> under GoTo Group will also be a formidable competitor, given it will also have an e-commerce arm. Please see <a href="https://www.smartkarma.com/insights/goto-enter-the-green-dragon" target="_blank" data-smartkarma-citation="insights:51664" rel="noopener">GoTo - Enter the Green Dragon</a> for more background</p>
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<p>The valuations look quite aggressive given that on the stated EV of US$30.36bn, it will be valued at 13.2x FY21E EV/Sales and 9.2x FY22E EV/Sales, which is pretty much in line with <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a>, which currently trades on .</p>
<p>We await more details on the planned floatation of GoTo Group, which is expected to be valued at more than US$40bn but probably deserves a higher multiple, given it has an e-commerce arm and a more established digital finance business, even though still at an early stage.</p>
<p>It is interesting to note that the share price of the Altimeter SPAC is approaching US$11, which suggests there is not much of a premium being built into the float, given that PIPE investors get shares at US$10.</p>
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Looking at the reports in the press on the news that Grab will seek a listing through an Altimeter Capital SPAC, there seems to be nothing but euphoria, without very much commentary on the potential risks ahead to the company's bullish forecasts and relatively high valuations. 

In terms of profitability, Grab maintains that ride-hailing was EBITDA positive in 4Q2019 but the company still lost US$800m in 2020.
Grab's projections are quite long-dated in the face of increasing and very unpredictable competitive pressures from the other major digital players, more especially the newly merged Gojek and Tokopedia under "GoTo Group" and from Shopee (Sea Ltd (SE US)). 


The delivery and mobility take-rate assumptions also look quite high given the potential for heavy promotional activity from major competitors.


In the company's presentation, there are three pages of detailed "Risk Factors Relating to Grab" in a small font covering a lot of bases, and leaving plenty of room for disappointment.
Our main concern would be the strong competition from Shopee on digital payments plus its move into food delivery in Indonesia under ShopeeFood.  It is also possible OVO stands to lose a good deal of business to GoPay with the merger moving ahead. 
We also see the combined force of Gojek and Tokopedia under GoTo Group will also be a formidable competitor, given it will also have an e-commerce arm. Please see GoTo - Enter the Green Dragon for more background



The valuations look quite aggressive given that on the stated EV of US$30.36bn, it will be valued at 13.2x FY21E EV/Sales and 9.2x FY22E EV/Sales, which is pretty much in line with Sea Ltd (SE US), which currently trades on .
We await more details on the planned floatation of GoTo Group, which is expected to be valued at more than US$40bn but probably deserves a higher multiple, given it has an e-commerce arm and a more established digital finance business, even though still at an early stage.
It is interesting to note that the share price of the Altimeter SPAC is approaching US$11, which suggests there is not much of a premium being built into the float, given that PIPE investors get shares at US$10.








Grab Holdings

Grab - Too Much Euphoria?