ComfortDelGro - DBS Research 2022-05-17: Better Taxi Economics Ahead

ComfortDelGro - Better Taxi Economics Ahead

  • ComfortDelGro (SGX:C52)'s 1Q22 revenue rose 4.6% y-o-y to S$895.9m, forming ~24% of our full year estimates. Excluding Alperton’s one-off disposal gain of S$37.2m, PATMI was also in line at S$38.8m, forming ~24% of our full year estimates
  • Government reliefs continue to drop, with ComfortDelGro receiving only S$4.7m in 1Q22 compared to S$33.4m a year ago. The tapering government reliefs were the main reason Public Transport Services’ operating profit – excluding Alperton disposal (-12.3% y-o-y) and Taxi operating profit (-37.6% y-o-y) – declined.
  • Taxi revenue was lower y-o-y due to divestment of the London taxi business and rental waivers granted in China due to COVID-19 restrictions.
  • We expect Public Transportation Services to continue recovering for the rest of FY22F as mobility in Singapore, Australia, and the UK rises. Average daily rail ridership across SBST’s trains reached ~853,000 in March 2022, prompting us to revise our forecasts for FY22’s average daily rail ridership to to ~939,000. Overall, we are now forecasting the Public Transportation Services segment to post a revenue of S$2.95bn in FY22F.
  • Singapore is grappling with a shortage in taxis and private hire vehicles (PHV), which we believe has boosted the earnings of existing drivers. We think improving driver earnings together with the other benefits ComfortDelGro provides (such as taxi rental discounts and discounted petrol kiosks) could incentivise more people to drive and thereby reverse ComfortDelGro’s taxi fleet decline. Notably, ComfortDelGro’s PHV rental fleet has recorded an increase from ~200 vehicles in 4Q21 to ~300 vehicles in 1Q22.
  • Additionally, we believe ComfortDelGro has tweaked its taxis business model and is now providing lower taxi rentals along with charging a 4% commission fee for bookings, changes we think could be long-term positives for the Group.
  • We change our valuation basis for ComfortDelGro from SOTP-based to a blend of forward EV/EBITDA and P/B given the withdrawal of ComfortDelGro’s Australian unit IPO. As such, we peg the Group to 5.3x forward EV/EBITDA and 1.25x P/B, both of which represent the -1 standard deviation level from the 10-year mean. We think ComfortDelGro deserves to trade at the -1 standard deviation level, as ROE is not expected to return to pre-COVID levels in FY22F. FY22F earnings were also revised up 25% mostly due to recognition of a one-off gain on disposal of the Alperton property.
  • Maintain BUY call on ComfortDelGro with a blended-target price of S$1.95.

Above is the excerpt from report by DBS Group Research.
Clients of DBS may access the full report in PDF @

Woon Bing YONG DBS Group Research | Paul YONG CFA DBS Research | 2022-05-17
SGX Stock Analyst Report BUY MAINTAIN BUY 1.950 SAME 1.950

Read also DBS Research's most recent report:
2022-11-15 ComfortDelGro - Slower But Ride Continues On

Target prices by 4 other brokers at ComfortDelGro Target Prices.
Listing of broker reports at ComfortDelGro Analyst Report.

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ComfortDelGro Announcements,
ComfortDelGro Dividends & Corp Actions,
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