Com­fort­del­gro pins Hopes on Bus and Rail

Singapore Business Review - - ABACUS -

Com­fort­del­gro (CDG) is def­i­nitely feel­ing the pres­sure these days from pri­vate car hire ri­vals. Its taxi seg­ment had to re­sort to right­siz­ing mea­sures, fur­ther re­duc­ing its fleet size to just roughly 15,000 taxis. An­a­lysts note that the com­pany is at­tempt­ing to sur­vive the rev­enue bleed­ing from its taxi seg­ment, which posted a 10.7% drop in the sec­ond quar­ter of 2017, whilst wait­ing for its bus and rail seg­ments to pick up the slack.

Andy Sim, an­a­lyst at DBS, fore­sees rough roads ahead for Com­fort­del­gro’s taxi busi­ness. He reck­oned fleet size will con­tract again next year—it is al­ready down by 7.5% and 8.9% from De­cem­ber 2016 and April 16, re­spec­tively—and av­er­age rev­enue per taxi to dip by 3% each year.

The ag­gres­sive ex­pan­sion of pri­vate hire care ser­vices will con­tinue to im­pact Com­fort­del­gro’s taxi busi­ness, with Eu­gene Chua, lead an­a­lyst at OCBC, fore­cast­ing taxi rev­enue to fall 15% and 8% in FY17 and FY18, re­spec­tively.

Mean­while, with the open­ing up of its rail busi­ness, DTL3 will break even in the sec­ond half of 2018, said John Cheong, an­a­lyst at May­bank Kim Eng. The ten­der re­sults for the Thom­son East Coast Line will likely prove fa­vor­able for the trans­port firm, al­though the con­tract will not start un­til 2019, mean­ing this growth cat­a­lyst will only kick in the medium to longer term hori­zon.

Shekhar Jaiswal, an­a­lyst at RHB, ac­knowl­edges growth po­ten­tial in the bus seg­ment if Com­fort­del­gro can ex­pand in key mar­kets over­seas. In United King­dom, the com­pany is now seek­ing fur­ther op­por­tu­ni­ties out­side of Lon­don.

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