ComfortDelGro's share price has declined by ~10% from its April peak of S$1.50. We believe much of this was driven by ComfortDelGro’s seasonally soft 1Q24 results and the market's expectation of below-street estimate earnings for the rest of 2024.
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What is driving our expectations of a stronger earnings outlook for ComfortDelgro in the rest of 2024?
i) Public Transport segment:
Margin recovery in UK bus operations amidst continuing service fee indexation benefits.
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Moderation in operating costs for Singapore’s public transport operations towards the end of 2024 as existing electricity contracts are re-contracted at lower rates.
ii) Taxi & Private Hire segment:
Y-o-y higher earnings for Singapore taxi operations amidst higher fare and commission rates.
Improvements in Chinese taxi business as the business gradually returns to pre-COVID-19 levels.
Earnings contribution from A2B Australia, which facilitates taxi bookings and payment processing fees for non-cash taxi payments. The acquisition of A2B was completed in Apr 2024.
iii) Other Private Transport segment:
Read more at SGinvestors.io.
Above is an excerpt from a report by RHB Securities Research. Clients of RHB may be the first to access the full PDF report @ https://www.rhbtradesmart.com/.
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