SINGAPORE – ComfortDelGro stands to benefit hugely from the impending lifting of phase two restrictions that could come as early as next month, according to a Smartkarma Analysts’ Insights on Tuesday (July 27).
Analyst Henry Soediarko of CrossASEAN Research, who publishes on Smartkarma, wrote that as restrictions in Singapore are eased, including dining in and working at the office, the mobility rate will increase and ComfortDelGro would be the main beneficiary through higher traffic in domestic travel (through MRT and buses) and also overseas trips, presumably due to higher taxi ridership to and from Changi Airport.
Debunking the notion that the company is merely a taxi operator, Mr Soediarko said: “It is worth noting that taxis only contribute to 12.5 per cent of the company’s total revenue, while public transport services (buses and trains) contribute the highest to the company, almost 80 per cent of the total revenue. This should dispel the public’s misconception that ComfortDelGro is only a taxi company.”
Still, the stock has generally underperformed in recent months, and closed three cents higher at $1.59 yesterday.
Since June, ComfortDelGro’s stock price has slipped around 8 per cent, no thanks to phase two (heightened alert) restrictions, which prohibited dining in and restricted physical mobility.
“As the restriction easing is expected, the positive sentiment for ComfortDelGro should come back, and investors should expect a price recovery,” Mr Soediarko said.
But he did not state a price target on the stock.
Although better known for its ubiquitous blue taxis on Singapore roads, ComfortDelgro is a major global player in public transportation services – especially buses – with significant operations in various countries, such as Britain, Ireland, China and Australia.
Early last month, the group announced that it will bring its taxi, private bus, car rental and leasing, as well as lifestyle businesses, under a new umbrella division called the Private Mobility Group (PMG). This comes amid an ongoing strategic review by the group.
“The move aims to synergise and leverage ComfortDelGro’s core strengths in land transport solutions, while making it easier for customers to gain access to the various services in the group,” it said in a bourse filing.
US investment group BlackRock is a substantial shareholder of ComfortDelGro, after its purchase of 5.2 million shares in May, bumping up its shareholding from 4.76 per cent to 5 per cent.
