[SINGAPORE] CGS International (CGSI) has downgraded its rating on Grab Holdings to “hold” from “add”, anticipating a slowdown in earnings growth in the second half of 2025 amid forecasts of weaker consumer spending.
In a report released on Thursday (Jul 10), analyst Jacquelyn Yow said she expects the slowdown in earnings to be especially pronounced in Grab’s delivery business. This comes despite a forecast gross merchandise value (GMV) of US$3.4 billion for Q2 2025, which would translate to growth of 9 per cent quarter on quarter and 19 per cent year on year.
The increase was attributed to a rebound after a seasonally weaker Q1 2025, due to the Ramadan fasting period and holidays such as Chinese New Year and Hari Raya. Yow also pointed to “good advertising revenue” as another reason for the growth.
For Q2 2025, CGSI predicts the revenue of deliveries segment will grow 7 per cent quarter on quarter and 25 per cent year on year, to US$445 million.
Despite the increase in revenue, the brokerage expects a slight margin compression in the deliveries segment in Q2 2025. Yow cited Grab’s strategy of driving top-line growth through lower-margin offerings such as “Grabfood For One” and “Shared Saver”, which attracts users amid weaker consumer sentiment.
Yow expects the mobility segment’s GMV to grow to 3 per cent quarter on quarter and 17 per cent year on year, to US$1.86 billion in Q2 2025, noting the increase in active drivers returning after Ramadan and Chinese New Year.
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This increase in GMV will translate into higher revenue growth in the quarter, with revenue being estimated to grow by the same percentages to US$290 million.
Strong earnings
Grab’s financial services segment was noted as the key area of positive development, with CGSI forecasting revenue from this segment to jump 20 per cent quarter on quarter and 50 per cent year on year.
This growth is supported by deeper GrabFin lending penetration among Grab’s ecosystem partners and users, along with higher loan disbursement growth for the digital banks.
Despite the downgrade in rating, CGSI increased its forecast earnings before interest, taxes, depreciation, and amortisation (Ebitda) for Grab by 6 per cent, citing narrowing losses for the financial services segment on the back of rollouts of more credit products in H2 2025.
This brings Grab’s overall adjusted Ebitda forecast to US$104 million in Q2 2025, which represents a 2 per cent decrease quarter on quarter, and a 63 per cent increase year on year. However, Yow noted that this forecast is still below Bloomberg’s consensus of US$109 million.
CGSI’s target price for Grab remains unchanged at US$5.20.
“We believe the current share price has already priced in the strong double-digit GMV growth guidance,” said Yow. “Furthermore, we do not anticipate any near-term upward revision in adjusted Ebitda guidance from management.”
Shares of Grab were down 1.4 per cent, or US$0.07, at US$4.92 as at 4.30pm on Friday.
