Mr Jackson Chia said he is not moving to another job, but will be taking time off to spend more time with family. 

SINGAPORE &ndash The chief executive of ComfortDelGro Corp&rsquo s newly formed Private Mobility Group (PMG), Mr Jackson Chia, has tendered his resignation.

 

PMG covers the transport giant&rsquo s taxi, private-hire vehicle, car rental and leasing as well as lifestyle businesses. It was formed in June 2021, with Mr Chia as its head.

 

Mr Chia, who turns 55 in 2024, was previously ComfortDelGro&rsquo s group chief sustainability officer.

 

He joined the Singapore-listed transport group in 2017 after a 28-year career in the Singapore Armed Forces, where he held the rank of rear-admiral and was chief of naval staff of the Republic of Singapore Navy.

 

When contacted, ComfortDelGro group chief executive Cheng Siak Kian said an announcement will be made on Mr Chia&rsquo s successor shortly.

 

Mr Chia told The Straits Times that &ldquo after seven years, it was time to move on&rdquo .

 

He said he is not moving to another job, but will be taking time off to spend more time with family. &ldquo There are things which money cannot buy, like time and health,&rdquo he said, adding that he is serving notice till September.

 

Mr Chia is also a director of Vicom, a vehicle inspection subsidiary of ComfortDelGro.

 

Other recent resignations include Mr Stephen Chow, head of ComfortDelGro&rsquo s Zig app business. Mr Clement Chua, who headed the group&rsquo s insurance brokerage business, has also quit.

 

ComfortDelGro&rsquo s share price ended one cent lower to $1.35 on June 25 &ndash less than half its value just five years ago.

 

The company has been facing profit erosion since ride-hailing companies such as Grab, Gojek and Ryde entered the Singapore market a decade ago.

 

The group reported a net profit of $40.6 million for the quarter ended March 31, 2024 &ndash a 23.8 per cent increase over the same period in 2023. Revenue rose 10.8 per cent to $1 billion, from $906.4 million over the same period in 2023.

Land transport operator ComfortDelGro C52 -0.75% has bought back shares on the open market for the first time in more than a year. On June 14, the company acquired 86,400 shares at $1.33 each.

 

The last time ComfortDelGro bought back shares was on June 5, 2023, when it acquired 207,000 shares at $1.04 each. Back then, the company was actively buying back as its share price was trading at its 20-year low. Within May and June last year, ComfortDelGro bought back a total of just over 1.14 million shares at average daily prices ranging from $1.04 to $1.12.

 

Over the past 12 months, ComfortDelGro&rsquo s share price, which was badly hit during the pandemic, gained nearly a fifth. However, from the recent peak of as high as $1.50 in late April, the stock has lost nearly 11% to change hands at $1.34 at the close on June 18.

 

The recent drop could be attributed to softer-than-expected earnings growth as indicated by the company in its 1QFY2024 ended March business update. The company reported earnings of $40.6 million in 1QFY2024, up 23.8% y-o-y, marking its fourth straight quarterly improvement after the pandemic. Revenue in the same period was up 10.8% y-o-y to $1 billion, with improvement across its public transport and taxi businesses.

 

ComfortDelGro&rsquo s 1QFY2024 numbers drew different reactions from analysts. UOB Kay Hian&rsquo s Llelleythan Tan and Heidi Mo, citing the lack of near-term catalysts, have downgraded the stock from &ldquo buy&rdquo to &ldquo hold&rdquo , along with a reduced target price of $1.56 from $1.72.

 

They note that despite improved rail ridership and higher fares, the public transport segment suffered from lower contract margins in Australia and higher operating costs.

 

ComfortDelGro&rsquo s taxi segment, on the other hand, enjoyed higher commission and platform fees, although the gains were offset by lower booking volumes.

 

While Tan and Mo took into account how its first quarter is seasonally weaker, they note there was a q-o-q decline in revenue, core operating profit and headline patmi. They also note that 1QFY2024&rsquo s core operating margin fell 2.0 ppt q-o-q, which was a &ldquo negative surprise&rdquo given that a full quarter&rsquo s contribution from higher taxi commission rates and rail fares in 1QFY2024 would have boosted overall margins.

 

Separately, DBS Group Research analysts Andy Sim and Chee Zheng Feng have flagged the q-o-q dips. Nonetheless, they believe the company&rsquo s y-o-y growth trajectory should be on track in the subsequent quarters of FY2024.

 

The way Sim and Chee see it, 2023 and 2024 mark a strategic capital management shift for ComfortDelGro as it deploys its net cash position towards bolt-on acquisitions, each with a ticket value of more than $100 million.

 

&ldquo We regard the two recent acquisitions announced &mdash A2B and CMAC &mdash as rational. They are earnings accretive and align with ComfortDelGro&rsquo s geographical and transport domain expertise,&rdquo state Sim and Chee, as they keep their &ldquo buy&rdquo call and $1.80 target price.

 

Similarly, Eric Ong of Maybank Securities has reiterated his &ldquo buy&rdquo call and $1.60 target price. Given the seasonally weak first quarter, Ong deems the core patmi of $40.6 million is roughly in line with his and market expectations.

 

While he shares similar sentiments with the market about the slow 1QFY2024, CGS&rsquo s Ong Khang Chuen is upbeat about the group&rsquo s UK business being a bright spot in FY2024. &ldquo We expect further margin recovery for ComfortDelGro&rsquo s UK business in FY2024 on bus service fee indexation and tender environment in London remaining favourable,&rdquo he says.

 

In his June 20 note, RHB Bank Singapore&rsquo s Shekhar Jaiswal, who has kept his &ldquo buy&rdquo call and $1.65 price target, is similarly upbeat despite the price correction following the 1QFY2024 update. &ldquo We, along with the consensus, continue to expect a stronger 2HFY2024, which will be aided by improvements in both Singapore rail ridership and UK public transport earnings, y-o-y higher taxi earnings, and earnings contributions from its A2B and CMAC Group acquisitions.&rdquo