Profits not so elusive any more; seems within Grab's reach

Opening Bell 🔔 is Tech in Asia’s free newsletter that brings you the biggest news and latest trends around Asia’s publicly listed tech companies. [Read from your browser]( Opening Bell 🔔 Welcome to the Opening Bell! Delivered every Monday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and latest trends on Asia’s publicly listed tech companies. If you’re not a subscriber, get access by [registering here](. --------------------------------------------------------------- Written by Rachel Chitra Journalist Hello {NAME} According to an ancient Tamil proverb, “one grain of rice is enough to tell if the pot is cooked.” After seeing its latest financial results, I couldn’t help but feel that this is true of Grab. Earlier this year, investors in the VC community and my banking sources told me that the super app’s financial services arm was doing quite well. Since Grab seemed to be getting the math right on this one unit, it might be symptomatic of how things were in its other businesses. On Thursday, Grab’s financial services segment reported a Q2 revenue growth of 223% year on year, and 43% of this revenue originated from its lending business. Analysts I’d talked to said that lending to a captive base – in this case, Grab’s ecosystem partners, including merchants and delivery riders - was a “smart move.” What was smarter was Grab offering flexible repayment schedules to this base. A Grab spokesperson told me that the company realized that the cash flows for a driver is widely different from an IT professional, who gets his salary credited monthly. “Monthly repayment of loans can become arduous for drivers, so we offered them the ability to repay on a daily or weekly basis,” said the spokesperson. Another innovation was Grab using its AI and data analytics capabilities to determine the credit worthiness of its driver partners. “If we see that the driver has taken a lot of trips, has a low cancellation rate, is rated highly by users - then we know he’s a good bet for a loan,” said the spokesperson. Banking sources also said that Grab’s efforts were noticed in the industry because of the speed with which it scaled up this business. So, do read my colleague Simon’s in-depth story, where he looks at not just Grab’s financial unit but the topline and profitability of all Grab’s business segments as well. With adjusted EBITDA having improved by 92% year on year, Grab could be close to turning profitable. Read on to find out more. -- Rachel  ---------------------------------------------------------------  THE BIG STORY [Grab defies peers, keeps growing while improving profitability]( With Grab’s mobility and delivery units – its largest and most profitable businesses – continuing to grow, the super app is now expecting to achieve EBITDA breakeven by the third quarter of this year. ---------------------------------------------------------------  3 TRENDS TO KEEP EYE ON Hot stocks, earnings reports, restructuring, pressure from activist investors, and more. 1️⃣ Saying “Zalo” to the US: VNG, the Vietnamese unicorn behind the country's most popular chat app, has filed to list on Nasdaq, following close on the footsteps of compatriot VinFast (VFS, NDAQ), reported [Nikkei](. VNG, which is backed by Tencent (0700, HKG) and Temasek, owns businesses in gaming, data centers, smart speakers, payments, and the chat app Zalo. VinFast's [spectacular debut]( on Nasdaq might see investor confidence and more Southeast Asian unicorns debuting this year. 2️⃣ Property is the “it” investment sector again?: Hong Kong-listed real estate manager ESR Group (1821, HKG) has raised US$2 billion this year through 15 new or enlarged funds. As much as 80% of the funding raised will be dedicated to the new economy sector, [reported Nikkei](. The new economy sector in real estate has been described as a place where new “megatrend” technologies and innovations emerge. The raise is causing ripples, given the funding winter in Asian markets and the loss in investor confidence after the [Evergrande property]( crisis. 3️⃣ Fashion’s best foot forward or backward?: Singapore-based fast fashion company Shein on Thursday tied up with SPARC Group to help the former expand into retail locations in the US, [reported Nikkei](. As SPARC is a joint venture between Forever 21 owner Authentic Brands and mall operator Simon Property (SPG, NYSE), this partnership will give Shein access to all of Forever 21's retail stores in the US. As per the deal, SPARC would also become a minority shareholder in Shein. Online ecommerce players experimenting with offline initiatives for a new revenue source is a decade-old trend in South and Southeast Asia. Rocket Internet-backed fashion ecommerce player Zalora started this in 2014 by opening its first [offline store](. More recently in 2023, another fashion brand, Nykaa (NYKAA, NSE), said it would continue expanding its [offline presence]( in malls. But given [Zalora's struggles]( with its [retail pivots]( it remains to be seen whether Shein's push to get into retail will pay off.  2 EYE-POPPING NUMBERS Tech in Asia scours the internet to bring you head-turning numbers from the world of business. - [US$2 billion]( The profit windfall banked by Japan's biggest exporters like Toyota (TM, NYSE), Komatsu (6301, TYO), and others thanks to a weak yen. - [US$3 billion]( The amount HSBC (HSBA, LON) is looking to earmark for a China-focused lending fund that will invest in sectors like healthcare, software-as-a-service, and fintech. THE ONE YOU DIDN'T SEE COMING We spotlight the story that had everyone talking and social media buzzing during the past week. Billionaire wars: Adani vs. Soros On January 24, 2023, the stocks of Indian conglomerate Adani Group tanked. This came after the release of a [research report]( by US short seller Hindenburg Research. Titled, "Adani Group: How the world's 3rd richest man is pulling the largest con in corporate history," the report had Adani Group stocks trading 84% below January levels even after [five months]( of the paper’s release. The group's market cap also dropped 49% in June, [Business Today]( reported. The conglomerate’s business segments felt the heat too. As of Thursday's close, shares of Adani Total Gas Ltd (ATGL, NSE) are still down 83%. Shares for Adani Transmission (ADANIENSOL, NSE), Adani Enterprises Ltd (ADNIENT, NSE), and Adani Wilmar Ltd (AWL, NSE), are all trading below January numbers. This has pushed Indian billionaire Gautam Adani from his spot as the world's [third richest man]( to the 23rd position, as per Forbes' real-time tracker of [global billionaire]( wealth. Now, [Indian media reports]( suggest that ahead of India's 2023 general elections, OCCRP, the investigative news outlet backed by the George Soros and Rockefeller Brothers Fund, is planning to publish another report, targetting corporate houses in the country. Business tycoon George Soros [drew flak earlier this year]( when he said the Hindenburg report could open the doors for a “democratic revival” in India. A [Times of India report]( citing sources said that OCCRP, founded in 2006 to report on organized crime, may publish a paper or a series of articles targeting Indian corporations. Soros has been viewed with [suspicion]( by the Indian media over the alleged role his non-profit [Open Society Foundation]( plays in festering dissent in Ukraine, Poland, Czech Republic, and Eastern Europe. So ahead of India's elections, popular political [commentators on Twitter]( feel that such an OCCRP exposé might show the links between Prime Minister Narendra Modi and India's billionaires, which could have an impact on the 2024 elections.  That’s it for this edition - we hope you liked it! Not your cup of tea? You can unsubscribe from this newsletter by going to our preference center at the bottom of this email. Happy investing and see you next week! Disclaimer: This content is for informational purposes only. Kindly do not construe any such information as legal, tax, investment, financial, or other advice. [ADVERTISE]( | [SUBSCRIBE]( | [HIRE]( | [FIND JOBS]( P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? Switch to a different frequency or get new content through our [preference center]( or [unsubscribe](. 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