COMFORTDELGRO has agreed to acquire all shares in A2B Australia which it does not already own via a scheme of arrangement, where the land transport operator will pay A$1.45 (S$1.31) in cash per share.

 

Australian taxi network operator A2B is also a provider of technology and payment solutions for the personal transport industry. It is listed on the Australian Securities Exchange, and its offerings range from taxi services brands 13cabs and Silver Service, to its Cabcharge digital payment solution.

 

ComfortDelGro and its Australian subsidiary Swan Taxis currently hold about 9.3 per cent of A2B.

 

At A$1.45 apiece, the consideration for ComfortDelGro to acquire the remaining shares in A2B stands at A$165.1 million, or about S$145.7 million in Singapore-dollar terms.

 

The cash offer excludes A2B&rsquo s payment of a A$0.60 per share special dividend in respect of net proceeds from its sale of certain properties, which is expected to be paid out on Jan 30, 2024.

 

On Friday (Dec 22), ComfortDelGro said its scheme to acquire the rest of A2B values the Australian transport company&rsquo s issued equity value at A$182 million on a fully-diluted basis.

 

ComfortDelGro intends to fund the transaction through existing cash and bank facilities.

 

It said acquiring the rest of A2B presents a &ldquo unique opportunity&rdquo for the group to acquire a portfolio of businesses &ldquo in line with ComfortDelGro&rsquo s strategy to scale its point-to-point mobility business in Australia&rdquo .

 

Describing A2B as &ldquo highly complementary&rdquo to ComfortDelGro&rsquo s business, managing director and group chief executive Cheng Siak Kian said the acquisition would also allow for the diversification of the group&rsquo s offerings in Australia, &ldquo transforming ComfortDelGro Corporation Australia into a national multi-modal mobility player&rdquo .

 

ComfortDelGro chairman Mark Greaves said: &ldquo As a major long-term shareholder of A2B, and with our deep global transport experience, we are well-placed in terms of capital and expertise to grow these assets, generating value and growth for our shareholders and enhancing connectivity for communities.&rdquo

 

The transaction is slated for completion in the first half of 2024, and is subject to approval from A2B&rsquo s shareholders, the Australian court and clearance from the Australian Competition and Consumer Commission, among other conditions.

 

A2B&rsquo s board of directors have unanimously recommended that the company&rsquo s shareholders vote in favour of the scheme, with expected voting to take place in late March 2024.

 

As taxi fares in Singapore are set to rise, RHB Bank Singapore has reiterated its &ldquo buy&rdquo call, with a target price of $1.50 representing a 6% upside with about a 5% FY2024 yield. 

 

On Dec 13, ComfortDelGro C52 0.00% (CDG) raised its taxi flag-down fares by 50 cents for its regular taxis, and distance and time-based charges by one cent. 

 

Analyst Shekhar Jaiswal says that these changes are to address taxi drivers' earnings, which have been impacted by higher fuel costs as well as the current and upcoming goods and services tax (GST) hikes. 

 

CDG has also extended its daily peak hours to incentivise more taxis to remain available and meet the rising demand, he notes. 

 

To address the availability of taxis, CDG has announced that it would extend the period during which an evening peak-hour surcharge applies by an hour to start at 5pm instead of 6pm. A peak-hour surcharge from 10am to 1.59pm on weekends, including public holidays has also been introduced. 

 

&ldquo CDG currently imposes a peak-period surcharge of 25% of the metered fare, and these changes are done to ensure there are enough taxis on the road to meet rising commuter demand during peak hours,&rdquo Jaiswal notes. 

 

As of October, CDG had a fleet of 8,841 Comfort and CityCab taxis, accounting for about 64% of the market, the analyst says. 

 

With the lack of drivers and high certificate of entitlement (COE) prices limiting the expansion of the point-to-point market, CDG should continue to see high demand for its taxi services. 

 

&ldquo CDG witnessed 8.1 million app bookings each in the last two quarters (i.e. estimated annualised bookings of 32.4 million). Assuming an average taxi fare of $20 and a commission rate of 5%, the revenue upside would be around $32.4 million, implying an unchanged estimated net margin for 2024, which would increase our 2024 profit by 0.8%,&rdquo says Jaiswal.

 

In addition, CDG says that about 70% of its UK bus contracts have seen cost indexation benefits, with the rest of the contracts expected to see the benefits flowing through in the next two quarters. The UK is also seeing new and renewal contracts priced at higher-than-current margins, as the irrational competition from the post-pandemic period has eased, according to the analyst. 

 

As such, Jaiswal maintains a positive outlook for CDG, as he expects to see improvements in overseas public transport earnings Singapore rail ridership and taxi earnings amidst a reduction in taxi rent rebates and the introduction of a new platform fee for bookings on the Zig platform. 

 

ComfortDelGro (CDG) and Guangzhou Public Transport Group (GZPTG) marked the launch of their new joint venture (JV), Guangzhou ComfortDelGro C52 -0.71% Guangjiao New Energy Company, today in Guangzhou, China. 

 

The JV will focus on deploying and operating electric vehicle (EV) charging infrastructure and related services, and the initial investment includes four charging stations equipped with 240 chargers, with a total capacity of 21,600 kilowatts (kW). 

 

Located in Guangzhou&rsquo s Huangpu and Baiyun Districts, these stations will support the operation of 480 electric buses.

 

ComfortDelGro&rsquo s JV partner GZPTG is the largest public transport and road transport enterprise in South China. It operates more than 13,000 electric buses in Guangzhou.

 

Apart from this JV, ComfortDelGro also operates three other businesses in China &ndash taxi, bus station and construction logistics &ndash in cities such as Beijing, Shenyang, Jilin City, Guangzhou, Nanning, Shanghai, Suzhou, Nanjing and Chengdu. 

 

The company runs a total of 9,400 vehicles in China including 5,800 EVs.

 

Cheng Siak Kian, ComfortDelGro Managing Director and Group CEO, who was present at the event, says: &ldquo ComfortDelGro welcomes the opportunity to deepen our longstanding partnership with this new joint venture and to offer more sustainable mobility solutions to support the green transition of the transportation industry.&rdquo

 

&ldquo As the leading land transport company in South China, GZPTG is firmly committed to low-carbon mobility solutions," says Lin Dian Sheng, Deputy General Manager of GZPTG.

 

&ldquo Our strategic partnership with ComfortDelGro taps on our respective strengths, enabling us to offer clean, efficient, and sustainable solutions to customers in China and beyond," he adds.