Initiating Grab at USD 3.80; Profitability Remains a Concern but Mobility Provides High Floor

We initiate coverage of Grab, the leader in ride-sharing and delivery businesses in Southeast Asia, with a fair value estimate of USD 3.80 and no-moat rating. Our valuation implies over 60% upside from the current market value and assumes a continued push into emerging markets and forecast robust gross merchandise value growth of 41% year on year in 2023. We think its core businesses—ride-sharing and food delivery—both have established driver and consumer networks and large market shares at this stage, which form the foundation for long-term revenue growth and our valuation. We believe Grab can continue its GMV growth in the short to mid term, but profitability remains an issue outside of its mobility business.