The Zhitong Finance App learned that Southeast Asian online car-hailing and food delivery platform giant Grab (GRAB.US) announced the results for the third quarter of 2026 after the US stock market on November 2 (Monday). Citi pointed out in a research report released later that Grab's third-quarter results were better than expected, that revenue and adjusted profit before interest, tax, depreciation and amortization (EBITDA) were better than its expectations, and that the company's revised full-year performance guidance for 2026 was also better than its expectations. Citigroup gave Grab a “buy” rating, and the target price was $5.50. This target price has room for an increase of more than 92% compared to the stock's closing price of $2.86 on Monday.
Performance review
According to financial reports, Grab's third-quarter revenue increased 27% year over year (up 30% year over year at a fixed exchange rate) to reach US$1.11 billion, higher than the market's agreed expectations of US$1.08 billion and Citibank's expectations of US$1.07 billion. The total commodity transaction value (GMV) of the on-demand services business (including delivery and shipping) increased 18% year over year (22% year over year at a fixed exchange rate) to reach US$6.84 billion, slightly higher than Citibank's forecast of US$6.80 billion. The Group's monthly trading users (MTU) increased 20% year over year to 57.2 million (higher than Citibank's forecast of 54.9 million). The GMV per month of active trading users corresponding to the on-demand service business was 135 US dollars, an increase of 2% year over year.
In terms of profit, adjusted EBITDA reached US$237 million, higher than Citi's estimate of US$194 million and the market's consensus estimate of US$193 million. However, the current profit was 18 million US dollars, which was lower than the market's unanimous expectations of 129 million US dollars and Citi's expectations of 99 million US dollars.
Grab raised IFRS total revenue guidance for the full year 2026 to US$4.15 billion to US$4.2 billion, compared to US$4.1 billion to US$4.15 billion, corresponding to a year-on-year increase of 23% to 25%. In contrast, Citi's estimate was US$4.15 billion, and the market's consensus estimate was US$4.16 billion. The adjusted EBITDA guidelines for the full year were raised from $720 million to US$740 million to US$790 million to US$800 million, corresponding to a year-on-year increase of 58% to 60%. In contrast, both Citi and the market agreed to expect US$737 million.
By business, the GMV of the distribution business increased 21% year over year (up 24% year over year at a fixed exchange rate) to reach 4.5 billion US dollars (higher than Citi's estimate of 4.44 billion US dollars). IFRS revenue was US$561 million, accounting for 12.5% of GMV; revenue for the third quarter of 2025 was US$465 million, also accounting for 12.5% of GMV. In contrast, Citi and the market agreed to expect $538 million and $550 million, respectively. Adjusted EBITDA was US$123 million, accounting for 2.7% of GMV, up from 2.1% in the third quarter of 2025. In contrast, Citi and the market agreed expectations were US$107 million and US$102 million, respectively.
The GMV for the mobility business grew 14% year over year (17% year over year at a fixed exchange rate) to reach US$2.34 billion (compared to Citibank's estimate of US$2.36 billion). IFRS revenue was US$349 million, accounting for 15% of GMV, up 10% year on year (up 12% year on year at fixed exchange rates); revenue for the third quarter of 2025 accounted for 15.5% of GMV. In contrast, Citi and the market agreed expectations were US$355 million and US$353 million, respectively. Adjusted EBITDA was US$207 million, accounting for 8.9% of GMV, the same as 8.9% in the third quarter of 2025. In contrast, both Citi and the market agreed to expect US$203 million.
Total loans to the financial services business increased 200% year over year to US$2.71 billion. In contrast, Citi's forecast was $2.6 billion, up 188% year over year. IFRS revenue was US$201 million, up 124% year over year and 132% at fixed exchange rates. In contrast, Citi and the market agreed expectations were US$179 million and US$173 million, respectively. Adjusted EBITDA was positive at $12 million, compared to negative $28 million in the third quarter of 2025. In contrast, Citi and the market agreed expectations were negative $3 million and negative $2 million, respectively. Other revenue was $1 million, and the adjusted EBITDA for this business segment was negative $4 million.
Citi's views
Citi believes that Grab's third-quarter results were better than expected, with strong monthly transaction user growth and EBITDA profitability. The adjusted EBITDA was 22% and 23% higher than the bank's and market's agreed expectations, respectively. Furthermore, the company raised its full-year performance guidelines, especially the sharp increase in EBITDA guidelines, which surprised the bank because the company had previously faced multiple adverse factors such as exchange rate fluctuations and weak local economy.
The distribution business continued to grow strongly. GMV grew 21% year over year, and the EBITDA margin expanded to 2.7%, clearly exceeding expectations. The increase in loan size also exceeded expectations. However, considering fuel costs and driver incentives, the overall performance of the travel business was in line with expectations.
Citi's Segment Plus Total Valuation Model (SOTP) determined that Grab's target price was $5.50. The specific valuation structure is as follows:
1) On-demand services business: $3.50 per share. The 2027 adjusted EBITDA for the on-demand services business, which is based on the total composition of delivery and travel services, is estimated to be US$1.46 billion, and a 10-fold valuation multiplier is applied, corresponding to a total value of US$14.6 billion, or US$3.50 per share. The 10-fold target valuation multiplier set by Citigroup is a 30% premium over the average valuation of Asian and global peers; the reduction in valuation multiples of these companies all exceeds the valuation adjustment of Grab's stock price.
2) Financial services business: $1.14 per share. Based on a valuation multiple of five times the estimated IFRS revenue of US$954 million in 2027, the corresponding total value is US$4.77 billion, or US$1.14 per share.
3) Cash: $0.90 per share. Based on the cash balance for the second quarter of 2026, with a 30% discount.