Daily BriefsSingapore

Singapore: Grab, TDCX, China Sunsine Chemical Holdings Ltd and more

In today’s briefing:

  • Grab – Greater Mobility Toward Profitability
  • TDCX IPO: Not a Typical Unprofitable Tech Services Company
  • China Sunsine Chemicals (CSSC SP): Strong fundamentals to buffer upcoming price tailwinds

Grab – Greater Mobility Toward Profitability

By Angus Mackintosh

Grab just announced a strong set of 2Q2021 results in its results call this week, with GMV (Gross Merchandise Value) increasing by +62% YoY to a record high of US$3.9bn, whilst adjusted net sales reached a new quarterly high of US$550m, an increase of +92% YoY.

The company’s revenue increased by +132% to US$180m, with adjusted EBITDA for 2Q2021 was (US$214m), down by US$8m YoY. 

Grab booked a net loss of (US$815m) versus (US$718m) in 2Q2020 loss but of this number US$608m related to non-cash items related to interest accrued on the company convertible redeemable preference shares, stock-based compensation, depreciation, and amortisation. 

Looking at a number of measures of profitability as % of GMV, Grab is moving in the right direction towards making a profit.

The company’s delivery business continued to be a strong performer, with +68% YoY growth in adjusted net sales, whilst mobility was impacted by various lockdowns in the South-East Asia region but still performed very well versus last year. Take rates have improved for both deliveries and mobility segments.

Grab saw GMV per transacting user increase by +27% YoY in 2Q2021, with GrabFood’s merchant base nearly doubling, and merchants using GrabPay nearly increasing three times. 

Grab also highlighted the strong performance of GrabMart and its PayLater businesses in Singapore and Malaysia. It has also launched GrabSupermarket in three markets, which has seen a strong reception, according to management.

The company’s financial services segment achieved another record quarter in terms of total payments, with a total payment volume of US$2.9bn in 2Q2021, a +66% increase from last year, although revenues remain quite small.

Grab announced a strategic alliance with Emtek (EMTK IJ) in July, which has interests spanning technology. telecoms, media, and healthcare.  This gives grab access to e-commerce and SMEs through Bukalapak (BUKA IJ)

The company highlighted that it sees encouraging trends for the rest of the year, as vaccination rates pick up but also flagged a note of caution given recent movement restrictions in South-East Asia, especially in Vietnam where even food deliveries are restricted currently.

Grab remains optimistic about the prospects for recovery as the region recovers over the next year, and it should benefit from this given its strong regional footprint but its competitors have been building war chests for their own expansion, which points towards rising competitive pressures

The company expects its merger with Altimeter Growth and listing to go ahead in 4Q2021 and has just filed its F4 prospectus today with the SEC in the US. 


TDCX IPO: Not a Typical Unprofitable Tech Services Company

By Shifara Samsudeen, ACMA, CGMA

TDCX (TDCX US) TDCX provides digital customer experience solutions for innovative technology and other blue-chip companies. The company’s solutions include omnichannel CX solutions, sales and digital marketing services, content monitoring and moderation services to a global client base that includes Facebook and Airbnb.

The company has filed for an IPO to list its shares in the US and plans to raise proceeds of about US$400m. The company plans to use about US$180m of the net IPO proceeds for repaying its debt (obtained under the Credit Suisse Facility) while the remainder will be used for business expansion including into new markets.

In this insight, we examine the company’s business model, segments, revenues, margins and the outlook on the company.


China Sunsine Chemicals (CSSC SP): Strong fundamentals to buffer upcoming price tailwinds

By KGI Securities

  • Sunsine’s improving profit margins were in line with the buoyant rubber chemicals sector.
  • Average selling price (ASP) could fall in 2H21 as macro conditions will not be as favourable as in 1H21. 
  • Capacity ramp-up in insoluble sulphur and anti-oxidant with a respective 30,000 tonnes each will offset the selling price correction.
  • We maintain OUTPERFORM with an unchanged TP of $0.68 as we expect the increase in sales volume in FY22 and FY23 to offset the downswing in ASPs.
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