ComfortDelGro - RHB Invest 2024-12-02: New Home Contract Win To Operate Jurong Regional Line; Maintain BUY

• Singapore One Rail (SOR), which is the Joint Venture (JV) between SBS Transit (SGX:S61) and RATP Dev, has won a contract to operate the 24km Jurong Region Line (JRL) for a first licensing period of nine years from 2027, with the option to extend it for two more years. The service fee for 11 years is ~S$750m.
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• We stay positive on ComfortDelGro (SGX:C52), and expect earnings growth to sustain in the quarters ahead.

Jurong Region Line Contract details.

• This is Singapore’s first rail contract win where a foreign operator is involved. As part of the Jurong Region Line (JRL) tendering process, foreign operators were allowed to participate in the tenders through JVs with local rail operators, as minority partners with less than a 25% stake. The total service fee quoted by SOR’s winning tender was ~8% lower than that quoted by SMRT Trains.
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• The Government will bear the fare revenue risk during the first licensing period of the JRL, to cover for the ridership and fare revenue uncertainties. SOR will be paid a service fee to operate the line, while the Government retains all fare revenue. The Government will offer an incentive payment for outperformance in areas such as service reliability, customer satisfaction, and operational and maintenance processes. Conversely, a service fee deduction will be imposed if SOR does not meet expectations.

More about Jurong Region Line (JRL).

• Read more at SGinvestors.io.

Shekhar Jaiswal RHB Securities Research | https://www.rhbgroup.com/ 2024-12-02 SGinvestors.io

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