Southeast Asian technology companies are complex versions of their American counterparts. Singapore’s Grab might list in New York, through an acquisition by a blank-cheque firm, valuing the ride-hailing and food delivery outfit at as much as $40 billion, according to the Wall Street Journal. But newer stakes in finance and more give Anthony Tan’s nearly ten-year-old company a more convoluted path to profit than its peer and backer Uber Technologies.
As the pandemic pummels requirement for taxis and car-sharing, food delivery has grown to account for at least half of Grab’s business. Now it is accelerating into financial services, moving beyond simple payments to offering insurance, wealth management products and loans. It’s a major opportunity in an underbanked and underserved region. Grab offers resort bookings too and is ramping up in groceries.
The diversification underscores its standing as an all-purpose”superapp” and puts it on a different course from Uber, which offered its regional operations to Catch in 2018. While the U.S. company is trimming its sprawl in search of profit, Tan is leading his company into new expensive endeavours. Because of this, credit ratings agency Moody’s doesn’t expect Grab to break even on an EBITDA basis until 2023 or later, a couple of years after its estimate for Uber.
Better comparisons for Grab’s company may lie in the east. China’s $253 billion Meituan, by way of example, is a food delivery pro dabbling in hotel bookings, movie ticketing, and bicycle sharing, and has a stake in electrical carmaker Li Auto. Its business trades on a multiple of over 9 times estimates for its next 12-months sales, roughly a third higher than Uber’s, Refinitiv statistics show.
Sprawl aside, Tan can probably count on a premium as a result of a scarcity of large Southeast Asian listed tech companies. 1 beneficiary is the $120 billion Sea. The inventory of the e-commerce-to-online matches conglomerate has risen around 15-fold since listing in New York in 2017 and it trades at nearly 13 times its forward earnings, much higher than Amazon or China’s social media-to-games behemoth Tencent. Grab can get the most out of its perceived complications.