ComfortDelGro - UOB Kay Hian 2023-10-04: Stronger Tailwinds As Rail Fare Increases

• The Public Transport Council (PTC) has recently announced a 7% increase in public transport fares starting from Dec 23. This will bring in additional revenue of S$20.9m for ComfortDelGro (SGX:C52)’s subsidiary, SBS Transit (SGX:S61), and contribute directly to bottom-line profits.
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• In view of improving rail and taxi ridership and a decent 4.7% dividend yield, we maintain BUY recommendation on ComfortDelGro with a higher target price of S$1.61 (S$1.56 previously).

No changes to taxi rental rebates and commission rates.

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• As a recap, changes to the daily taxi rental rebate would be reviewed quarterly while the commission rate is reviewed monthly. We do not expect any near-term changes to the 10% daily taxi rental rebates given that ComfortDelGro’s daily taxi rentals are almost double that of peers.
• However, ComfortDelGro’s 5% online booking commission rate is considerably lower when compared to major competitors like Grab (20%) and GoJek (15%). We therefore expect potential upward revisions in 4Q23, closing in on ComfortDelGro’s peers.

Leaving COVID-19 behind.

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Llelleythan Tan Yi Rong UOB Kay Hian Research | Heidi Mo UOB Kay Hian | https://research.uobkayhian.com/ 2023-10-04 SGinvestors.io

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