Maybank Investment Bank has raised Grab Holdings 2024-2026 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) estimates by 23 percent to 27 percent.

The research house said in a note on Tuesday that following a relatively muted second quarter, Grab made a solid come back in third quarter with an across-the-board improvement, beating its estimates by 1 percent to 36 percent across its key metrics.

“Grab’s scale, supportive growth factors (healthy spending across digital platform & tourism growth) as well as support from new/nascent verticals (lending, Grab Mart, restaurant reservation) should help to sustain the momentum in fourth quarter and 2025,” it said.

It also noted competition as well remains under check allowing for incentive optimization.

Maybank also raised Grab’s target price to $5.40 after factoring in the new estimates and applying a higher target multiple (in line with global peers).

It is noted that the Grab’s management indicated the strong momentum in the third quarter continued in October and early
November.

Tourism arrivals remain strong with Singapore and Thailand tourist arrivals in October increasing 17 percent and about 21 percent year on year respectively, a premium segment for Grab.

Flywheel effect in its delivery’s arm should increase with the restaurant reservation services, which in turn should also allow it to grow higher margin advertising revenue, said Maybank.

It opined that Gojek’s exit from Vietnam and relatively muted Foodpanda/TikTok (Foodpanda Asia gross merchandise value [GMV] down but revenue up) performance reflect a rational competitive environment, which in turn should allow for incentive optimization.

It is noted that Grab rolled out lending products through its Digibank arms in Malaysia and Indonesia in the fourth quarter while the majority of the sales and marketing was done in the third quarter.

This sets its fintech arm up for revenue acceleration in the fourth quarter/2025 while costs should come down.

While USD strength versus ASEAN currencies weighed on Grab’s nine-month results, but Maybank expects this to normalize in the fourth quarter.

Maybank estimates Grab’s net cash position at $4.7 billion (ex customer deposits) while the company turned free cash flow (FCF) positive starting the second quarter.

Although management sees a long runway for growth as only
about 5 percent of the ASEAN population is using its services, Maybank sees most of those initiatives to be organic in nature covered under the current operating expenditure (opex)/ capital expenditure (capex) spending.

“While Grab is keeping an eye on inorganic opportunities (such as the Chope acquisition recently), we think they will be small in nature as Grab has walked away from large acquisitions (such as Foodpanda),” said the research house.

Under this backdrop, it sees Grab is in a comfortable position to start returning cash.

Assuming it returns FCF starting 2025 (still maintaining its current cash position), Maybank estimates its forward dividend yield of 2 percent to 3 percent.

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