GRAB

[Wildreamz]

Thanks Choon, as I don't follow Comfort closely, I don't even realize they have an app now that offers Flat taxi rate and private cars for hire (probably need to work more on online marketing).

Will be interesting to see Comfort engage in price war in Singapore and all the other regions they compete in. Except unlike Grab, gritty entrepreneurship might not be in their DNA/Comfort-zone (no pun intended).

Also, Grab also do delivery/food delivery and can subsidize their operation from cash flows from other countries, as well as shareholder money from the States right?

At this point, I don't think there are any obvious winners, or any party have any clear moat, TBH. Personally, I am content to observe from the sidelines, and will not want to put any capital at risk until there is more clarity.

Edit: Also, Comfortdelgro has an inherent disadvantage as of now for being more asset-heavy, and shareholder base in Singapore might not be used to prolonged money losing streak. The fact that Grab as of today, is still valued about 10x more than Comfortdelgro by the market, certainly doesn't help.

[CY09]

Yes, CDG has a ride hailing app. In my opinion, CDG has the capability to become a super app in Singapore. Firstly, it has a brand name that people trusts and secondly, if its apps becomes the accepted payment mode at public transport, it becomes massively adopted. Turn on phone app, NFC enabled, tap and go.

This is similar to SIA having its own Krispay which links up with many merchants

Of course if CDG does it, it will be directly fighting with Grab--> using ride hailing product to become the widely accepted system. It can tap on Vicom, SBS transit, comfort taxis as their node of payment. CDG also has cash flow generating cash cows in SBS and Vicom to subsidies its taxi ride hailing arm. However, I am quite sure if CDG CEO proposes this, its majority shareholder will vote against it. This is because they will take cognizant that they will affect Temasek's investments in Grab which amounts to a few billions; which will be disrupted by CDG, who is in a stronger financial position than grab in terms of cashflow generation ability.

Grab losing Singapore market share will mean the value proposition of its banking license will be affected negatively

However as CEO CDG, this is a potential gamechanger and potentially making me a fintech company like square, since I have the consumer base to gain mass acceptance of my new product.

[Wildreamz]

Hi CY09,

If CDG CEO has a strong enterprising spirit, and is not afraid of disrupting themselves, and disrupting the status quo (ie challenging the dominance of Grab and their backers, Gojek etc.), and is able to raise huge amount of capital from VCs/public markets etc. and rebuild CDG business model from the ground up (transforming themselves to a Fintech/Tech Startup/Unicorn).

They will have a shot.

But in your opinion, how much of a fighting chance do you think CDG really have?

[CY09]

Hi CY09,

If CDG CEO has a strong enterprising spirit, and is not afraid of disrupting themselves, and disrupting the status quo (ie challenging the dominance of Grab and their backers, Gojek etc.), and is able to raise huge amount of capital from VCs/public markets etc. and rebuild CDG business model from the ground up (transforming themselves to a Fintech/Tech Startup/Unicorn).

They will have a shot.

But in your opinion, how much of a fighting chance do you think CDG really have?

Quite high in Singapore's market. They have the capital and the public credential's to build it up. They can be the localized version of gojek or alipay albeit with a 5.6million market size. The next step is to slowly expand to Vietnam and Australia where they have some dealings with

[Wildreamz]

Hi CY09,

Thanks for your honest feedback. 

I'm not so optimistic. Personally, I would only invest in proven founder-entrepreneurs that are back against the wall, with the grit and inventiveness to make it work.

Good luck to all investors.

(not vested in CDG or Grab)

[specuvestor]

Agree strategically but I'm not sure of management's will to transform. It's been glacial and piecemeal and they are cautiously following what works so they can remain a cash cow.

Yes, CDG has a ride hailing app. In my opinion, CDG has the capability to become a super app in Singapore. Firstly, it has a brand name that people trusts and secondly, if its apps becomes the accepted payment mode at public transport, it becomes massively adopted. Turn on phone app, NFC enabled, tap and go.

This is similar to SIA having its own Krispay which links up with many merchants

Of course if CDG does it, it will be directly fighting with Grab--> using ride hailing product to become the widely accepted system. It can tap on Vicom, SBS transit, comfort taxis as their node of payment. CDG also has cash flow generating cash cows in SBS and Vicom to subsidies its taxi ride hailing arm. However, I am quite sure if CDG CEO proposes this, its majority shareholder will vote against it. This is because they will take cognizant that they will affect Temasek's investments in Grab which amounts to a few billions; which will be disrupted by CDG, who is in a stronger financial position than grab in terms of cashflow generation ability.

Grab losing Singapore market share will mean the value proposition of its banking license will be affected negatively

However as CEO CDG, this is a potential gamechanger and potentially making me a fintech company like square, since I have the consumer base to gain mass acceptance of my new product.

[Choon]

Actually I was not comparing which is a better company to invest in.

Just curious about profitability (or lack of) of Grab's ride-hailing business. I am under the impression that Grab rents its vehicles. So a rental model should be more expensive than CDG's vehicle ownership model (plus with all the cost-savings from intra-group provision of inspection/maintenance/diesel sales services).

Can CDG transform into tech company and outcompete Grab?

My personal view is that the most important factor would be: what's in it for management to take risk and work so hard? Another factor would be that CDG does not shareholders trickling cheap capital for CDG to burn.

On the other hand, if the main shareholder is still Singapore Labour Foundation, CDG would likely need to pay regular dividends and is not able to burn lots of internal generated cash to engage in a price war.

[CY09]

Thanks guys... moving away from CDG.

What are your evaluations on grab business, worth noting the company is now selling at $7 per share (USD$28 billion). Do you think the company is worth this value or more due to its developments? The company is currently backed with a few billions in cash after receiving another round of cash injection from Temasek and a group of investors as part of its listing.

[specuvestor]

Sorry does Grab own the vehicles? I thought the drivers rent the vehicles themselves if necessary?

Grab has been burning cash, at the peak about S$1b annual, competing with Uber and I think that business is slight positive now. You don't see much incentives or offers from Grab ride business nowadays

However they are now burning cash from food business. It makes strategic sense if the ride business can subsidise the food business growth but again it won't be profitable until someone blinks. In my opinion they probably should plan for a normalised post-COVID in 2022, notwithstanding omicron variant, that will reduce demand and volume for delivery.

Sidenote on CDG is that besides SLF, they want to remain a high yielding stable global transport company that insti will be keen on.

Disclaimer: I haven't looked at the Grab SPAC numbers just basing on my memory of their previous years' presentations.

Actually I was not comparing which is a better company to invest in.

Just curious about profitability (or lack of) of Grab's ride-hailing business. I am under the impression that Grab rents its vehicles. So a rental model should be more expensive than CDG's vehicle ownership model (plus with all the cost-savings from intra-group provision of inspection/maintenance/diesel sales services).

Can CDG transform into tech company and outcompete Grab?

My personal view is that the most important factor would be: what's in it for management to take risk and work so hard? Another factor would be that CDG does not shareholders trickling cheap capital for CDG to burn.

On the other hand, if the main shareholder is still  Singapore Labour Foundation, CDG would likely need to pay regular dividends and is not able to burn lots of internal generated cash to engage in a price war.

[Wildreamz]

Yes. Grab do own their own car rental fleet: https://www.grab.com/sg/driver/transport...mTEALw_wcB

Not sure how large it is, compared to CDG.