Is Grab still grabworthy?

On Sept 27, Grab announced that it expects slower revenue growth of 45% to 55% for FY2023 ending December 2023, as it adjusts to the market downturn and speeds up efforts to reverse several years of losses.

$CGS(06881.HK)$ Research is keeping its “add” recommendation on Grab with an unchanged target price of US$4.10, while Citi Research is reiterating its “buy” call on Grab.

$DBS Group Holdings(D05.SG)$ Research on the other hand is less bullish as it keeps its “hold” recommendation with an unchanged target price of US$2.85.

Overall, $Citigroup(C.US)$ is positive on Grab’s outlook: “We come away positively given management’s confidence in financial outlook, stable competitive landscape, and solid relationship with relevant authorities. More important, Grab does have an experienced and dedicated management team to execute and expand its superapp ecosystem to strengthen its reach in lower tier cities.”

CGS-CIMB Research: “Grab will continue to maintain a strong balance sheet by preserving cash prudently. Investments will continue to be made in developing products and technological innovations. On the M&A front, Grab will remain selective and only consider targets which are earnings accretive and possess elements that support Grab’s current ecosystem.”

DBS on the other hand sees this as a right strategy for Grab to implement amid an impatient market. The research house expects revenue growth from the delivery segment to “take the hit” followed by fintech.

Shares in Grab last traded at US$2.72 on Sept 27.