To The Moon

I think $GRAB is up next.

Going to highlight all of the DD I've been compiling on this name over the past month so it'll be a long post.

Would love to hear counter perspectives, people who think the thesis makes sense & where folks see the issues/opportunity on this ticker.

I have a heavy position of around $80K+ that could be used in many other names (like buying the $NVDA dip which probably would be much safer) so to me, there is a level of asymmetry that I think can play out over the coming years.

Alright, I've spent a minimum of 100 hours over the past month going deep on this one...let's get into it.

So, what's $GRAB?

In short, Grab is a super-app in Southeast Asia. Think PayPal, Shopify, Uber and Doordash combined.

The super-app concept has not worked well in America, maybe Elon can change that with X, but across the world -- users do enjoy being able to centralize all their daily tasks inside one product. China is the strongest example with WeChat.

$GRAB trades on the Nasdaq. When you buy shares, you are not buying ADRs. The company is headquartered in Singapore and from my research has the cleanest books for a company reporting from the region, especially due to the quality of investors they have (Uber, Brad Gerstner, Morgan Stanley, etc) so the fear of accounting issues or misreporting numbers is not there, especially given the quality of management that we will discuss.

Why is the name getting my attention?

- Trades at 30% cash, meaning every $1.35 you buy per share is cash. $18B market cap with $6B in cash.

- Revenue growth of 17% YoY (20% in constant currency)

- 5 consecutive quarters of positive EBITDA

- 3 consecutive quarters of positive FCF

- Became GAAP profitable last quarter

- Monthly Transacting Users is growing 16% YoY to 42M

- Chart has potential to break out from a 3-yr consolidation

- Southeast Asia is one of my favorite emerging markets

When I was first introduced to $GRAB, I was told it was the "Uber of Southeast Asia." This was cool to me, but it wasn't something that would get me to invest. Only upon actually looking deeper into the name and the financials was it becoming evident to me that these guys don't just want to be Uber, they want to be a central part of every single aspect inside a person's life in Southeast Asia...

What's the long term vision?

To understand this, we have to go a bit deeper into why the company was founded + the SEA region.

Grab was founded by Anthony Tan and Tan Ling -- the idea originally was to make a service that was safe when it came to getting a taxi at night. They both realized how large the SEA region was in regards to demand for this product and quickly began expanding, raising billions of dollars and eventually going public through a SPAC. One of the founders, Anthony Tan, still runs the company to this day which is a very big green flag to me. I really, really like when founders still run the company as the sacrifice and pain needed to actually take something to new heights usually is only understood by a founder.

The SEA region is an incredible opportunity where growth will CAGR strongly at over the coming decade. There's about 700M people (42M of them use Grab every month) and most of the population is beginning to come online with smartphone penetration expected to be 85% in the region by 2030.

The only other market that is similar in terms of growth is India, growing GDP at 7%. The top 6 countries in SEA are growing GDP at an average of 5.1%.

So, if we have a region of 700M people that all are earning more money, coming online, embracing new technologies and need/want transportation, groceries, financial services, and e-commerce....the opportunity now becomes around which companies have the network effects to create synchronous experiences via their brands that connect all those consumers and products together.

I believe $GRAB will be that company.

What are the major parts of their business?

Deliveries -- GMV growing 12%, revenue growing 13%

Mobility -- GMV growing 20%, revenue growing 17%

Financial services -- Loan portfolio growing 81%, revenue growing 34%

The biggest element of their growth is that Adjusted EBITDA is growing 35% on average across all these categories. During Q3 2024, $GRAB raised their adjusted EBITDA to $308 million - $313 million, up more than $30M from the high end of their previous guidance.

The mobility and deliveries part of the business I expect to continue to grow because of growth in SEA.

Financial services is growing rapidly and I think this is one of the company's best opportunities. They aren't just a ride-hailing app that you can get groceries from, they are become an integrated financial ecosystem that is beneficial for all parties.

Merchants can get a loan from Grab and the majority of SEA that is underbanked can now use a product they use everyday to deposit money and have it function as their bank. In fact, one of the most surprising parts of their financial services business is the growth in deposits...

From Q3 call:

"We've been able to bring in deposits much faster and with less cost than we had even planned. So you've seen that the positive momentum across GXS Bank in Singapore and GXBank in Malaysia, where customer deposits have grown 50% quarter-on-quarter. So over $1 billion now in the third quarter. And then Superbank, which is the Indonesian bank, which only just launched in July, hit 2 million accounts by October by last month. So a really tremendous uptake. So we are able to raise deposits at a very low cost. And therefore, because of the focus we have on data science and the lending model, you can see very clearly that we can continue this very positive data flywheel for lending."

$GRAB is growing financial services at 34% YoY, is probably 2 quarters away from being positive in adjusted EBITDA for this segment, grew deposits 50% QoQ and 300% YoY and growing their loan portfolio 81% YoY.

From the Q3 PR on deposit growth in the 3 bank they operate:

"Growth was driven by an increased number of depositors, with GXBank recording 892,000 deposit customers as traction in Malaysia continues to be strong. GXS Bank also had over 100,000 deposit customers as of the third quarter, growing from over 72,000 depositors as of the last quarter, on the back of the public roll-out of the Boost Pockets in early-September which allows customers to lock their funds for a chosen period of time to earn a boosted interest rate. In Indonesia, Superbank reached 2 million users in October 2024, doubling from 1 million users in August. This was achieved in less than six months following its public launch in June. Integration between Superbank and the Grab ecosystem was the key driver of this growth, with over half of the users coming from Grab."

What's more exciting than the growth in financial services is that the only reason this growth is happening is because of $GRAB's ecosystem. A super app should be able to introduce new products and use their network effects to then grow users and upsell them on brand new services. The fact that financial services is showing this type of growth gives me strong confidence that Grab will continue to build and offer new products that are compelling to users in the SEA region, allowing them to penetrate more of the 700M users that could be using Grab.

Can you trust management?

Short answer: yes. I've done a lot of research on MGMT and my conclusion is that these guys are competent, they know how to present themselves, they can answer analyst questions very well with great detail and they are honest about their future projections for growth.

It's very hard to invest in any company when you are worried about MGMT but Anthony Tan (CEO) and Peter Oey (CFO) and Alex Hungate (COO) are rockstars. Additionally, if you go on Linkedin, you can find c-suites that on the ground and actually work with merchants in their restaurants and drive with drivers to deliver products. I really like this MGMT team and think they have the ability to continue executing.

Quick note on the founder -- Anthony Tan gave up his relationship with his father to focus on $GRAB and not continue with the family business. To this day, they don't talk.

When someone is that hungry to build something for themselves, it means they are going to do everything they can to make it successful. $GRAB is already a success going from an idea to an $18B company, but you don't give up your relationship with your father to go this far. You do that because you want to go all the way and take over the world. I think Anthony Tan has that drive in him.

Advertising

Advertising is not a massive part of their business, yet has grown nicely and will contribute to about $200M of revenue in 2024. I want to share a quote from MGMT on the Q3 call that highlights how serious the network effects are in this company:

"I was just in Indonesia two weeks ago and in Manado. And they had – I met with a burger chain entrepreneur and all of his advertising was done through Grab, both for delivery and for their dining in, which was really powering great success. And he had also taken a loan through the platform. This guy didn't have any account management. So he had actually proposed the loan, I presume, through a whitelisting process by us on the back end and taken down the loan in order to order the beef to manage his working capital for his supply chain for beef, which was obviously his most expensive ingredient. And that was allowing him to grow even faster and open more outlets. So I think self-serve is really, really a key part of our strategy because many of our merchants are small and many of them are in far-flung places like Sulawesi."

Every time I read this quote from earnings, I grow deeper to understand why $GRAB is winning in SEA. First, advertisers don't need to pay unless they cant a delivery. This is a BIG deal. It's like PPC in Google/Amazon advertising. If you only have to pay for advertising if it converts, the adoption by merchants should be much stronger.