Faster Breakeven, Not GMV Growth Should Be the Focus on Grab; Shares Undervalued, Keep USD 3.80 FVE

We keep our Grab fair value estimate of USD 3.80 despite the company reporting better-than-expected revenue and profitability in its fourth-quarter results. Grab reported revenue of USD 503 million, which was 25% better than PitchBook consensus and also provided 2023 revenue guidance of USD 2.2 billion-USD 2.3 billion—better than our USD 2.08 billion estimate. The company accelerated its breakeven timeline to fourth-quarter 2023, revised from second-half 2024. However, its share price declined 8% likely due to a lower implied gross merchandise value growth forecast in 2023—where we estimate delivery and mobility GMV to grow 5% and 25% year on year in 2023 (compared to Bloomberg consensus of low-teens and 30% growth), respectively. We believe the pullback provides an attractive opportunity, given that Grab is already at its long-term EBITDA margin targets and should surpass them beyond 2023, as management has implied that it can further pull back subsidies to reach margins closer to peer levels.