ComfortDelGro - RHB Invest 2024-09-06: Australia Bus Tender Win; BUY

• ComfortDelGro (SGX:C52) was awarded three bus contracts in Australia, with a ~AUD1.6bn contract value to be spread over a 10-year term commencing in Jul 2025. The win allows ComfortDelGro to not only retain its existing contracts but also add new services in its Victoria Public Bus business.
• - Read this at SGinvestors.io -

New contract win in Australia.

• ComfortDelGro has been given contracts to operate bus services in three of the five Melbourne metropolitan zones in Victoria, Australia. The three franchises are worth around AUD1.6bn or S$1.4bn. The contract will last 10 years, beginning in Jul 2025.
  • - Read this at SGinvestors.io -
  • ComfortDelGro stated that the buses and depots are funded as part of the contracts, and it will switch to zero-emission operations by the conclusion of the contract term. The contracts will include 250 public bus and school routes, served by nearly 360 buses.
• While we view the contract win as positive for ComfortDelGro, it may not have a significant impact on earnings. This is largely because ComfortDelGro had earlier indicated that its Australian public transport business is seeing increased competitive pressure, which could translate into lower margins.
• In its 2Q24 results briefing, ComfortDelGro noted that it is facing driver shortages as well.

One-off earnings impact in 3Q25.

• Read more at SGinvestors.io.

Shekhar Jaiswal RHB Securities Research | https://www.rhbgroup.com/ 2024-09-06 SGinvestors.io

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