ComfortDelGro ENGIE has opened its 1,000th charge point in Singapore. The latest charge point, unveiled by Speaker of Parliament Seah Kian Peng on Nov 16, is located at Blk 333 Serangoon Ave 3, near Serangoon Central and Nex.

 

The latest launch coincides with ComfortDelGro C52 ENGIE&rsquo s third anniversary and adds to the provider of electric vehicle (EV) charging solutions&rsquo regional charging network alliance in Malaysia and Thailand. ComfortDelGro ENGIE aims to have 8,000 charging points across all three countries by 2030.

 

In its release, the company says it will launch a new mobile app this year, allowing users to plan road trips. The app will include several features such as calculating the necessary charging stops based on the state-of-charge by vehicle type and enabling users with full access to charging stations in Malaysia.

 

" As we celebrate our third anniversary, we' re not just looking back at our achievements, but forward to the future of sustainable mobility,&rdquo says Freddie Chew, general manager of ComfortDelGro ENGIE. &ldquo Reaching our 1,000th charge point in Singapore is a testament to our rapid growth and unwavering commitment to a greener future, while our expanding cross-border network alliance with like-minded partners further cements our position as a leader in EV charging solutions offering greater value to our customers for their charging needs, anywhere and everywhere."

The purchase of UK&rsquo s Addison Lee marks a shift towards an asset-heavier business model, says analyst

 

MAYBANK Securities has downgraded its call on ComfortDelGro to a contrarian &ldquo hold&rdquo , with a lower price target of S$1.60, from S$1.65 previously.

 

This comes even after the land transport operator reported a positive set of third-quarter results, which the brokerage considered in line with expectations. 

 

In a report on Friday (Nov 15), Maybank analyst Eric Ong said he had &ldquo some reservations&rdquo on the group&rsquo s recent acquisition of a 97 per cent interest in Addison Lee, a premium private hire, courier and black taxi provider in the UK.

 

While he acknowledged that the transaction &ldquo may be accretive&rdquo to the group, he noted a challenging operating and regulatory landscape in the UK.

 

In his view, the acquisition also marks ComfortDelGro&rsquo s shift towards an asset-heavier business model, coupled with Addison Lee&rsquo s &ldquo relatively low return-on-equity and growth prospects&rdquo .

 

Ong noted the competitive London taxi industry and Addison Lee&rsquo s &ldquo drivers&rsquo worker status issue&rdquo , in a reference to the company&rsquo s ongoing tribunal case over whether its drivers should be classified as workers or self-employed contractors.

 

&ldquo Additionally, we think the group is likely to incur more capex on the renewal/replacement of taxi vehicles with its larger fleet now, which could adversely impact its free cash flow,&rdquo he said. 

 

To recap, more than 700 Addison Lee drivers are seeking to be legally recognised as workers. The hearing began on Oct 28, and the drivers&rsquo successful claim would entitle them to back-dated compensation, including for holiday pay and minimum wage.

 

Citing law firm Leigh Day, which is involved in the case, the Financial Times on Sep 14 reported that Addison Lee was potentially facing more than £ 10 million (S$17 million) in damages.

 

RHB and CGS-CIMB are nonetheless positive regarding ComfortDelGro&rsquo s acquisition of the UK company, but suggested that it could move the group&rsquo s balance sheet from a net cash to net debt position.

 

Reiterating its &ldquo buy&rdquo call on the stock with an unchanged S$1.70 price target on Friday, RHB believes the group&rsquo s earnings growth momentum can be sustained amid a continued improvement in UK public transport margins, and contributions from the group&rsquo s Australian bus tender wins.

 

Analyst Shekhar Jaiswal said he was &ldquo fairly confident&rdquo of the company being able to sustain an estimated dividend payout ratio of about 75 per cent for the current financial year up until FY2026.

 

He also expects acquisitions, including that of Addison Lee and an improving China taxi business, to contribute to ComfortDelGro&rsquo s taxi and private-hire vehicle business segment in 2025.

 

Separately, CGS-CIMB analyst Ong Khang Chuen said he estimated the Addison Lee acquisition to be accretive to ComfortDelGro&rsquo s FY2025 earnings per share by about 6 per cent.

 

Based on its Oct 23 report, the research house has an &ldquo add&rdquo call on the stock with a price target of S$1.70.

 

Maybank Securities analyst Eric Ong has cut his target price on ComfortDelGro C52 (CDG). This follows news of the Mainboard-listed company&rsquo s GBP269.1 million ($461.2 million) acquisition of one of the largest fleets of premium private hire vehicles in London. 

 

Announced on Oct 23, CDG intends to fund the purchase with external borrowings as it needs to pay off Addison Lee&rsquo s existing debt facilities in full upon completion. Management believes this acquisition will serve as a catalyst for CDG&rsquo s expansion into the &ldquo premium mobility market&rdquo , strengthening its overall point-to-point (P2P) proposition in the UK.

 

Upon completion, the 7,500 drivers and 5,000 vehicles of the Addison Lee network will join CityFleet Networks&rsquo existing private hire and black taxi fleets elsewhere in the UK such as Liverpool, the Wirral, Chester and Aberdeen.

 

&ldquo While not exactly cheap, this latest move should expand CDG&rsquo s portfolio in the UK, enabling it to leverage Addison Lee&rsquo s expertise to deepen and scale its differentiated premium segment globally. It will also strengthen the group&rsquo s overall P2P proposition, creating strong synergies with its existing businesses that include pre-planned and on-demand ground transportation for businesses, as well as private and ride-share transfers to airports, bus/train stations and ports via its indirect subsidiary, CMAC, [whose] acquisition concluded in February,&rdquo writes Ong in an Oct 24 note. 

 

Ong is keeping &ldquo buy&rdquo on CDG but with a lower target price of $1.46 from $1.65. 

 

CDG&rsquo s business update for its 3QFY2024 ended Sept 30 is slated for mid-November. Ong expects CDG to record core patmi of about $55 million, up 4% q-o-q and 14% y-o-y.

 

Addison Lee&rsquo s profit &lsquo appears low&rsquo

 

Meanwhile, CGS International (CGSI) analyst Ong Khang Chuen is keeping &ldquo add&rdquo on CDG with an unchanged target price of $1.70. 

 

Addison Lee&rsquo s FY2024 profit before tax &ldquo appears low&rdquo at GBP7.7 million, says CGSI&rsquo s Ong. &ldquo This was mainly dragged by high interest burden (up to 10% interest rate). We estimate its FY2024 adjusted ebitda at GBP35 million, which implies the acquisition was valued at 6.2 times trailing enterprise value/ebitda, as debts by Addison Lee will be discharged upon deal completion on   Nov 7.&rdquo

 

Assuming CDG funds the acquisition with new borrowings at 5% interest cost, CGSI&rsquo s Ong estimates the acquisition to be earnings accretive at GBP8 million [$13.71 million] per annum.

 

Separately, CGSI&rsquo s Ong forecasts CDG to post patmi of $58 million in 3QFY2024, higher than Maybank&rsquo s forecast. &ldquo Tender environment for London public bus remains favourable, and we expect further contract wins by CDG at current elevated margins to drive UK&rsquo s ebit margin towards mid-single-digits by end-FY2024 and to see further improvement in FY2025.&rdquo

 

Valuation &lsquo palatable&rsquo : DBS

 

DBS Group Research has the highest target price on CDG among the three research houses, with a &ldquo buy&rdquo call and $1.80 fair value. 

 

&ldquo We believe investors will likely have questions around the strategic fit to CDG and its ability to grow the business going forward,&rdquo write DBS&rsquo s analysts in an Oct 24 note. &ldquo CDG has alluded to challenges in the UK P2P market with intense competition from ride-hail companies, which prompted it to sell its smaller London P2P business to Addison Lee for GBP3 million back in June 2021. However, it is now buying the total business of Addison Lee.&rdquo

 

While the reversal in stance is noteworthy, DBS believes there is &ldquo justified rationale&rdquo for the sale back then and the purchase now. CDG was &ldquo sub-scale&rdquo back then and Addison Lee&rsquo s valuation has since fallen to &ldquo more palatable levels&rdquo .

 

Carlyle was looking to sell the company for as high as GBP800 million in 2019 and eventually sold the company back to its founder&rsquo s son, Liam Griffin, with private equity backing at an undisclosed valuation, notes DBS. 

 

&ldquo We do see certain synergy with the recent CMAC acquisition Addison Lee&rsquo s cabs could be utilised as means of transport to meet emergency/last minute travel needs. Moreover, since the takeover by Liam, the company has managed an impressive turnaround with return to profitability. [The] company was making losses pre-Covid-19, from FY2017 to FY2019,&rdquo says DBS. 

 

With incentives in place to retain the management team, DBS believes Addison Lee could continue its &ldquo strong growth trajectory&rdquo , with an estimated 27% ebitda growth in FY2024.

The addition of Addison Lee will extend the group&rsquo s London footprint and grow its taxi and private hire network to more than 34,000 vehicles globally

 

TRANSPORT operator ComfortDelGro is acquiring Addison Lee, a premium private hire, courier and black taxi provider in the United Kingdom, for £ 269.1 million (S$461.2 million).

 

The acquisition &ndash through wholly-owned subsidiary CityFleet Networks &ndash is a catalyst for ComfortDelGro&rsquo s expansion into the premium mobility market, and strengthens its overall point-to-point proposition in the UK and globally, the group said in a bourse filing on Wednesday (Oct 23).

 

The addition of Addison Lee will extend ComfortDelGro&rsquo s London footprint and grow its taxi and private hire network to more than 34,000 vehicles globally.

 

Addison Lee is the largest premium point-to-point operator in the UK, with 7,500 drivers and 5,000 vehicles.

 

London&rsquo s black cabs, also known as hackney carriages, have operated in the capital since 1634, well before the invention of the internal combustion engine. Famously, their drivers must pass what is believed to be the world&rsquo s toughest taxi exam to earn the right to drive these cabs.

 

ComfortDelGro managing director and group chief executive Cheng Siak Kian said: &ldquo Beyond expanding our footprint in the UK, this acquisition will enable us to leverage Addison Lee&rsquo s expertise to deepen and scale our premium point-to-point capability globally.&rdquo

 

ComfortDelGro chairman Mark Greaves said that the acquisition is in line with its strategy to expand the group&rsquo s point-to-point mobility portfolio.

 

He noted that 90 per cent of Addison Lee&rsquo s existing fleet is already made up of cleaner-energy vehicles, which will also help accelerate ComfortDelGro&rsquo s fleet transition journey.

 

ComfortDelGro operates CityFleet Networks in several locations across the UK.

 

It also provides pre-planned and on-demand ground transportation to businesses, as well as private and ride-share transfers to airports, bus and train stations, and ports through its recently acquired business, CMAC Group.

 

ComfortDelGro also owns and operates several bus and coach services across the UK.