Uber Stock – Breakingviews – Grab listing offers up an uber Uber
MUM(BA)I (Reuters Breakingviews) – Southeast Asian technology companies are complex versions of their American counterparts. Singapore’s Grab might list in New York, via an acquisition by a blank-cheque firm, valuing the ride-hailing and food delivery outfit at as much as $40 billion, according to the Wall Street Journal. But newer bets in finance and more give Anthony Tan’s nearly ten-year-old company a more convoluted path to profit than its peer and backer Uber Technologies.
As the pandemic pummels demand for taxis and car-sharing, food delivery has grown to account for at least half of Grab’s business. Now it is accelerating into financial services, going beyond simple payments to offering insurance, wealth management products and loans. It’s a big opportunity in an underbanked and underserved region. Grab offers hotel bookings too and is ramping up in groceries.
The diversification underscores its status as an all-in-one “superapp” and puts it on a different course from Uber, which sold its regional operations to Grab in 2018. While the U.S. company is trimming its sprawl in search of profit, Tan is leading his company into new costly endeavours. As a result, credit ratings agency Moody’s does not expect Grab to break even on an EBITDA basis until 2023 or later, one or two years after its estimate for Uber.
Better comparisons for Grab’s business may lie in the east. China’s $253 billion Meituan, for example, is a food delivery specialist dabbling in hotel bookings, movie ticketing, and bike sharing, and has a stake in electric carmaker Li Auto. Its enterprise trades on a multiple of over 9 times estimates for its next 12-months sales, roughly a third higher than Uber’s, Refinitiv data show.
Sprawl aside, Tan can probably count on a premium thanks to a scarcity of large Southeast Asian listed technology companies. One beneficiary is the $120 billion Sea. The stock of the e-commerce-to-online games conglomerate has risen around 15-fold since listing in New York in 2017 and it trades at almost 13 times its forward sales, much higher than Amazon or China’s social media-to-games behemoth Tencent. Grab can make the most of its perceived complications.
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