ComfortDelGro 23rd AGM: Key Investor Updates and Price-Sensitive Developments

Introduction

Key Financial and Strategic Highlights

• Fuel Cost Sensitivity and Hedging:
  CDG& rsquo s public transport contracts are largely protected against fuel price volatility through contractual indexation and hedging. For the Taxi/PHV segment, fuel surcharges have been introduced to support drivers amid elevated fuel prices. The company is actively monitoring the situation and adjusting its hedging strategies to manage ongoing volatility.
• Dividend Policy and Balance Sheet Resilience:
  CDG has maintained a dividend payout ratio of at least 70%, with recent years seeing a payout of up to 80% of profits. Despite capital expenditure (CAPEX) for fleet electrification and expansion, much of the CAPEX in public transport is reimbursed by transport authorities, mitigating long-term cash flow risks. The company maintains a conservative leverage profile and adequate liquidity to support future M& A and fleet investments.
• Return on Equity (ROE) and Profit Growth:
  ROE improved from 8.1% in 2024 to 8.9% in 2025, driven by profit growth. CDG remains committed to enhancing returns through earnings improvement while maintaining stable equity levels.
• Interest Rate Outlook and Debt Management:
  Net finance costs are expected to decline in FY2026 due to scheduled debt repayments and lower benchmark rates. However, management remains vigilant to global macroeconomic risks, including geopolitical tensions.
• Taxi Business Under Pressure:
  The Singapore taxi fleet continues to shrink (from 8,424 in 2024 to 7,602 in 2025), reflecting an industry-wide decline. The B2B segment is stable, but the B2C segment faces strong competition from ride-hailing companies. CDG is focusing on premium offerings, adjusting commission structures, and scaling up autonomous vehicle (AV) initiatives.

Significant Developments and Price-Sensitive Issues

• Impact of the Iran War:
  The ongoing conflict has led to higher energy costs, supply chain disruptions, and reduced air travel. While contractual mechanisms and hedging have mitigated some cost increases, the UK Taxi/PHV business has seen lower volumes due to reduced airline customers. CDG is monitoring the situation and stands ready to implement further measures if needed.
• CAPEX and Bus Fleet Expansion:
  CAPEX surged in 2025, mainly due to the purchase of 452 buses for Metroline Manchester and 271 EV buses in London, funded through secured contracts. Further CAPEX is anticipated if CDG wins upcoming public bus franchise tenders in the UK and contract renewals in Singapore.
• Contract Renewals and Tender Opportunities:
  The Tampines bus package in Singapore will be handed over to a new operator from mid-2026. One major tender (Serangoon-Eunos) is ongoing, and the company is actively pursuing large-scale tenders in the UK (Liverpool, West Yorkshire) and Denmark (Copenhagen Metro).
• Autonomous Vehicle (AV) Developments:
  CDG& rsquo s AV pilots in Singapore and China are progressing, with commercial robotaxi operations in Guangzhou already generating revenue. The company is preparing to scale these operations to other cities, which could be a significant new revenue stream in the medium term.
• Taxi/PHV Segment Challenges:
  EBIT margins for the segment fell from 17.6% in 2024 to 13.3% in 2025 (before PPA amortisation and net gain/loss on disposal), driven by competition and lower fleet size. CDG does not expect a return to previous high EBIT margins, especially as acquired businesses like A2B and Addison Lee operate at lower margins.
• Strategic Acquisitions and Debt:
  Borrowings increased significantly in 2025, primarily to fund bus acquisitions and the purchase of the remaining shares in CityCab. CDG will consider further M& A and may take on additional debt if attractive opportunities arise, provided returns justify the investment.
• Rail Fare Increases:
  The Public Transport Council granted rail fare increases from December 2025, which will boost revenue. However, under the New Rail Financing Framework, higher profits may result in increased licence charges, partly offsetting the benefit.
• Employee-Related Cost Pressures:
  In Australia, industry-wide driver shortages have led to higher wages. CDG& rsquo s bus contracts include wage indexation mechanisms, helping to manage cost inflation.
• Zig App User Base:
  CDG& rsquo s Zig app boasts over 1 million monthly active users and more than 2 million unique users, with a stable user base in 2025.
• Other Segments:
  The Inspection & Testing segment (VICOM Ltd) contributed 14% of Group profit on just 2.8% of revenue and is poised for further growth. The acquisition of CMAC turned the Other Private Transport segment from loss-making to profitable.

Potential Price-Moving Catalysts

1. Further M& A Activity:  Any significant acquisition or divestment, including expansion into new regions or scaling up AV operations, could materially impact share value.
2. Contract Wins/Losses:  Success or failure in major public transport tenders (UK, Singapore, Scandinavia) could swing earnings expectations.
3. Macro Risks:  Fuel price shocks, supply chain disruptions, and regulatory changes linked to geopolitical events (e.g., the Iran war) remain a key risk and may lead to share price volatility.
4. Dividend Decisions:  Any deviation from the established dividend policy may affect investor sentiment.
5. Autonomous Vehicle Scaling:Success in commercialising AVs in China and Singapore could create a new growth engine for the Group.

Conclusion

• Record revenue:  Hit  S$5.06 billion in FY2025  (first time above S$5B)    
• Profit growth:  Net profit rose  9.4% YoY to S$230.3M     
• Dividend:  Total FY2025 dividend  8.5 cents/share (80% payout)     
• Key driver:  Overseas business now contributes  55% of revenue   

🔎 How Fuel Price Shocks Affect CDG

• Direct exposure: CDG operates Singapore&rsquo s largest taxi fleet, so fuel costs are a major operating expense.
• Recent measures:
  • CDG announced it would absorb part of fuel price hikes to support drivers. axlnews.com
  • It also raised taxi fares and added app booking fees (Mar&ndash May 2026) to offset higher costs. The Straits Times
• Analyst view (CGS International, Apr 2026):
  • Sector risk is persistently high oil prices.
  • CDG&rsquo s defensive profile and ability to pass costs through make it relatively resilient.
  • Target price: S$1.70 vs last close S$1.46, with ~6% dividend yield. minichart.com.sg

⚖ ️ Key Considerations

🚨 Risks & Trade‑ offs

• If escalation is playing for real  (prolonged conflict), oil prices could stay elevated, straining CDG ability to absorb costs.
• Without government cushioning, drivers and operators bear more pain, potentially reducing fleet profitability.
• Consumer sensitivity: Higher fares may push some riders toward cheaper alternatives (e.g., ridehailing promos), though CDG scale helps retain demand.

✅ Investor Takeaway

• Truth in the claim: Yes, CDG is exposed to fuel price shocks, and escalation in US Israel/Middle East hostilities would push Singapore fuel prices up.
• But: CDG has mechanisms (fare hikes, subsidies, hedging) that cushion the blow. Analysts still rate it as defensive with buy/accumulate calls.
• Bottom line: CDG would be impacted, but not crippled the bigger risk is if geopolitical tensions keep oil prices high for months without government support.