Grab's SPAC deal delayed to Q4, but its prospects are still rising

  • Grab and Altimeter have announced a delay in completing the SPAC merger to the fourth quarter from July previously
  • Delay due to the audit of the last three years taking longer than anticipated. This does not alter our positive view
  • Operationally, Grab is doing even better than expected. We raise our target price to US$16 implying 39% upside
Grab's SPAC deal delayed to Q4, but its prospects are still rising

On Wednesday, Altimeter and Grab announced a delay in the completion of the SPAC deal. It will now take place in Q4 21 and not Q3 21 as anticipated earlier. The delay is due to Grab still finalising its financial audit (for fiscal years 2018, 2019 and 2020) in accordance with the Public Company Accounting Oversight Board standards as required by the US Securities and Exchange Commission (SEC).

Grab is also working with the SEC to obtain pre-clearance of certain accounting policies and related financial disclosures.

The delay does not alter our view that Altimeter's (AGC US) reverse acquisition of ASEAN's super app Grab is a compelling opportunity. It has immense prospects in all three of its segments – ride-hailing, food delivery, and digital banking.

Raise target price and earnings forecast

Altimeter revealed yesterday that Grab's food delivery segment recorded a GMV of US$1.7bn – this is a 49% rise yoy. Recently, in addition to GrabMart, the company launched a GrabSupermarket pilot project in partnership with HAO mart in Singapore. The partnership will significantly increase the product offering by GrabSupermarket, which will initially house over 5,000 unique products and gradually expand to over 10,000, raising our food delivery GMV expectations to US$8bn from US$6.1bn previously. Hence, we raise our earnings forecasts for FY 21-23 (see table below).

Earnings revision table

We also raise our target price by 7% to US$16, implying 39% upside. The target price is DCF-derived. Reiterate Buy.  

FCFF valuation

Comparative valuation table

Income Statement (US$mn)

Balance sheet (US$ mn)

Cash Flow Statement (US$ mn)

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Altimeter: The SPAC opportunity to Grab

Three things the market needs to Grab about the Altimeter SPAC

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