Personally i will not touch this stock currently but there is pro and con to this. there are the reasons:
Pro:
1) Heavily funded by heavy weights and support by Singapore state investment group Temask. Which give them access to one of the most develop countries in South east Asia.
2) The founder is part car empire family in Malaysia. Which prove that Grab will have 2 countries easily covered.
Cons:
1) It yet to turn profit and lose margin is at 47%!!! Here the thing, it use to be a ride hailing business but this business is brutal in margin. In South East Asia transportation is realtive cheap and the most expensive city like Singapore an average ride is just USD $7 - $9 dollar excluding surcharge (late night onwards). So to get a share per ride, the margin has to be extremely low. This was more evident during the previous years when Grab and Uber was doing priicing wars with each other, untill and agreement was made with Uber and Grab mergering together for south east asia. So when the war is over and consumers are so use to the cheap ride offer and Grab is not offer the same incentive anymore what happens? Grab cannot increase it price too much and thus the second point begins.
2) With ride hailing cannot give the revenue, grab decide to move into food delivery, loans, digital banking and etc…
The only most proftiable path for them is digital banking and ewallet, which means with low margin business model. The only solution to increase each of it product offer is to reduce and control bottom line while still trying to expand.
There is why they are lose margin is at 47% (more or less) and uber is at 17%. Think about this.
3) The founder get 60% voting right despite holding 3.3%. Seriously has anyone did not learn from “Travis Kalanick” incident?? It also show that greed for power, so this makes me question about the governance of the company. Somehow i always use Airbnb CEO Brain Chesky has the currently modern benchmark for leadership, managment and governance. So Grab does not fly with me.
4) Valuation and time to reach profitablity is not attractive. With huge amount of pipe investors and warrants at $10, no way as a investor i will take a risk at even at $10 or $11.
5) It has equal weight rivals as Gojek is merging with Tokopedia. Why, these 2 companies has major controlling stake in indonesia market. Which is one of the largest market in South East Asia.
Overall, if this stock drop below 10 i might consider and if is drop to low 9 dollars or more i will “grab” a little more. Other than that it is a red red “X” for me.
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