Our thoughts on Grab’s & Sea Group’s 2022 Q1 performance

This week, both Grab and Sea Group, two of Southeast Asia’s largest consumer internet groups, announced their 2022 Q1 results.

In 2021, we analysed extensively about Grab’s quarterly performance (2021 Q1, Q2, Q3). Since Grab is now a public company, you would be able to get good coverage from equity research analysts. The same for Sea group as well.

We will just share some thoughts about both companies’ performance. Of course, you can read their earnings releases (Grab, Sea Group) as well for detailed numbers and to formulate your own opinion:

1. Grab has narrowed its losses significantly – this is good news especially in the current capital environment.
2. In fact, if you have been following the company’s development, it was actually starting to focus on rationalising its spend while continuously pushing for growth since Q4 2019 – earlier than many of its peers.
3. In particular, the competitive pressure on Grab’s ride hailing and deliveries businesses seem to be easing.
4. This is in line with our observation on the ground – Shopee Food seems to be less aggressive in Q1 2022, compared to Q4 2021.
5. At Momentum Works, we have received multiple requests from investors for more frequent coverage of food delivery volume and market share (we do it once a year now). We are adjusting our processes to make the exercise more efficient – stay tuned!
6. We heard in the earnings calls that analysts were trying to figure out how much of the deliveries GMV came from the Jaya Grocer acquisition. We thought the acquisition makes a lot of sense, not just in aggregating revenue and profits.
7. Note that online grocery is extremely difficult globally, a learning through experimentation approach which Grab has been adopting is much better than an all in push.
8. In addition, other good news for Grab including 10% increase in Monthly Transacting Users (MTU) to 30.9 million, and 19% increase in spend per MTU.
9. This shows that the (pessimistic) prediction that Southeast Asian consumers’ limited consumption power does not hold.
10. On Sea Group, its gaming cash cow Garena is clearly, but also very expectedly, losing steam. It is an industry wide problem post covid.
11. The company is publishing a new game (probably very soon) but it is hard to imagine it replicating the success of FreeFire.
12. In a way, it is a validation that the company’s pivot into ecommerce and (subsequently) digital financial services was good foresight.
13. The digital financial services part is a bright spot of Sea Group’s performance. With its already large consumer credit operations, securing low cost capital in a sustainable way in the new interest environment is probably very important.
14. Thus far, Grab has been doing a better job negotiating large partnerships than Sea Group, a feat that the latter will need to catch up.
15. Both companies are quite clear in their strategy, and have communicated that well in their announcements. The key, as always, will be execution!
16. To know more about these companies, you can watch the replay of Momentum Academy’s sharing:
    1. Off the record: Behind Shopee’s doors
    2. Off the record: What’s up with Grab