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UOBKH lowers target price on ConfortDelGro amid higher platform fees and increasing competition
UOB Kay Hian is keeping its " buy" recommendation on ComfortDelGro (CDG) but with a lower target price of $1.77 from $1.83 previously.
Although analysts Llelleythan Tan and Heidi Mo are upbeat on strong earnings growth, the group has recently raised its taxi platform fees starting 2025 and is expected to face increasing competiition with two new ride-hailing competitors entering the market.
The group has increased its platform fee on its online booking app Sig by 30 cents to 50 cents from the start of 2025, in a respose to rising costs from the Platform Workers Act which would require platform companies such as CDG to contribute more to the Central Provident Fund accounts of platform workers, coupled with work injury initiatives and enhanced insurance coverage.
Following the increase in platform fees, CDG&rsquo s platform fees would increase from a flat fee of 70 cents to $1-$1.20 depending on distance travelled and travel time. Other domestic ride-hailing competitors such as Grab and Gojek have also increased their platform fees in response to the Platform Workers Act.
" Based on our estimates, we expect minimal earnings impact from the increased platform fees for CDG&rsquo s taxi segment," say Tan and Mo, who reckon that the increase in platform fee revenue would be largely offset by higher manpower costs incurred due to the Platform Workers act.
Furthermore, as ride-hailing becomes slightly more expensive sector-wide, they opine that CDG&rsquo s online booking volumes may be impacted as consumers switch to cheaper alternatives such as public transport.
" Given that CDG&rsquo s online booking volumes have already been on a downtrend, we expect booking levels to continue trending downwards after the increase in platform fees," they say.
Meanwhile, Singapore' s Land Transport Authority (LTA) announced that two new ride-hailing service providers, Geo Lah and Trans-cab Services, have been awarded one-year provisional licences. The provisional licences would allow the two new operators to fine-tune their operations before being considered for a full Ride-Hail Service Operator Licence. Also, existing major players such as CDG and Grab have had their respective licences renewed.
Tan and Mo expect the two new ride-hailing entrants to have a slight negative impact on CDG' s taxi margins as domestic competition intensifies. " Given that most drivers are already on multiple service platforms, assuming competitive pricing from these new entrants, we expect CD&rsquo s declining booking volumes to fall further, leading to lower margins for CDG&rsquo s taxi segment as online booking commission drops," they say.
Furthermore, LTA recently announced that the Tampines bus package which is currently being run by CDG&rsquo s subsidiary, SBS Transit, has been called for tender with results expected in 2H2025. The existing bus package is expected to expire in Jul 2026 and is likely to draw bids from both domestic and foreign operators, similar to recent past tenders in 2022-2023.
Besides the usual two-envelope process which takes into account both quality and price factors, the LTA also mentioned that it would evaluate proposals for electric bus operations. As a recap, the Tampines bus package was one of five bus packages which were extended at lower service fees as part of a deal made with LTA due to the shift in financing framework for the Downtown MRT line. The expiry of the other four packages have not been made known to the public.
" Like past tenders, we reckon that the upcoming Tampines bus package tender implies potential risks to CDG&rsquo s near- to medium-term earnings no matter the outcome. Even if CDG wins back the Tampines bus package, we expect lower margins due to competitive bidding," say Tan and Mo.
In their view, CDG&rsquo s incumbency advantage is likely to increase its chances of winning back the contract given the existing economies of scale and cost savings that would allow it to put in a competitive bid.
However, based on estimates, this would lead to a $2 million decline in the group&rsquo s 2026 public transport segmental operating profit as margins compress. If CDG loses the contract, the group is expected to experience around $4 million (a half year&rsquo s contribution) negative impact to its 2026 public transport segmental operating profit. " As our base case, we expect CD to win back the Tampines bus package," say the analysts.
Over in UK, Tan and Mo expect public transport to improve in 4Q2024. Management noted that the UK bus contract renewals are still ongoing, which would lead to a better margin profile for 4Q2024 and beyond.
" Excluding the consolidation of the Addison Lee acquisition, we maintain our expectations that margins for the UK business would continue trending upwards towards the high single-digit to low-teens percentage in the medium to long term, albeit at a gradual pace given that only 15-20% of contracts are renewed every year," they say. Also, seasonally higher scheduled bus chartering activities in 4Q2024 would boost segmental revenue and profitability.
Closer to home, improving domestic rail ridership would help boost rail revenue y-o-y while bus revenues are set to drop for 4Q2024 due to the loss of the Jurong-West bus contract coupled with softer margins from the Australian business.
" Moving into 4Q2024, we expect stiff competition from ride-hailing peers to continue, leading to lower completed bookings and dragging down CDG&rsquo s overall commission on completed jobs," say the analysts. However, additional contributions from the A2B and the newly-completed Addison Lee acquisitions are expected to support the taxi segment&rsquo s upward growth momentum. However, due to acquisition costs, management noted that any significant earnings impact from Addison Lee would likely only come through in 1Q2025.
MAYBANK KIM ENG: ComfortDelGro Corporation Ltd
Current Price: S$1.46 (as of 7 January 2025)
Target Price: S$1.60
Recommendation: HOLD
Up/downside: +10%
https://www.investor-one.com/editorial/26877-Analyst-Alert-Recommendation-And-Consensus-On-Seatrium-Ltd-CSE-Global-Oiltek-International-Ltd-ComfortDelGro-Corporation-Ltd
Hmm have been dormant for quite a while despite non stop good news, wonder when the pushing will begin
CRL is more than twice JRL. Hope SBST wins that too.
CDG owns 75% of SBST. Revenue averages $70m per year or $50m for CDG share. About 1.3% increase in revenue for CDG whose 2023 annual revenue is $3.8B. Not as big as I thought, but positive nonetheless.
Good news! JRL in pocket. Let?s wait for CRL.
SINGAPORE - A joint venture between SBS Transit Rail and French transit company RATP Dev Asia Pacific has been appointed the operator of the Jurong Region MRT Line (JRL).
This is the first time that a foreign operator will be involved in the local rail industry, said the Land Transport Authority on Nov 28.
RATP Dev Asia Pacific is a subsidiary of French public transport operator RATP Dev.
The contract is for nine years, with the option for LTA to extend the licence for two more years. The service fee quoted for 11 years is about $750 million.
LTA said the bid submitted by the joint venture was 8 per cent lower than the other bid by SMRT Trains.
The 24km JRL will be the seventh MRT line in Singapore, connecting key areas in the western part of Singapore, including the Jurong Industrial Estate, Jurong Innovation District and the Nanyang Technological University.
The 24-station above-ground line is slated to open in three stages, from 2027 to 2029, with an initial ridership of 200,000 in the initial years. This is expected to grow to more than 500,000 in tandem with developments in the areas it serves.
SINGAPORE - A joint venture between SBS Transit Rail and French transit company RATP Dev Asia Pacific has been appointed the operator of the Jurong Region MRT Line (JRL).
This is the first time that a foreign operator will be involved in the local rail industry, said the Land Transport Authority on Nov 28.
RATP Dev Asia Pacific is a subsidiary of French public transport operator RATP Dev.
The contract is for nine years, with the option for LTA to extend the licence for two more years. The service fee quoted for 11 years is about $750 million.
LTA said the bid submitted by the joint venture was 8 per cent lower than the other bid by SMRT Trains.
The 24km JRL will be the seventh MRT line in Singapore, connecting key areas in the western part of Singapore, including the Jurong Industrial Estate, Jurong Innovation District and the Nanyang Technological University.
The 24-station above-ground line is slated to open in three stages, from 2027 to 2029, with an initial ridership of 200,000 in the initial years. This is expected to grow to more than 500,000 in tandem with developments in the areas it serves.
Entropy72 ( Date: 19-Nov-2024 11:19) Posted:
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Hope the Morgan Stanley upgrade of Singapore market will propel CDG further.
Good points raised Entropy.
No wonder you are king of cdl thread
No wonder you are king of cdl thread
Entropy72 ( Date: 19-Nov-2024 11:19) Posted:
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In 2015-16, FED rate was about 0.5%. Today, FED rate is about 4.5%.
In 2015-16, CDG dividend yield was 7c/$2.4 = 2.9% which is 2.9%-0.5% = 2.4% higher than risk free rate. CDG yield today is 4.95%, only 0.5% higher than risk free rate.
To widen the gap against risk free rate to 2%, either CDG boost dividends or FED cut rates. We need CDG to generate more PATMI and Powell to stay the course of lowering rates.
Look out for upcoming award of operating contract for JRL and CRL. CDG should have a good chance of securing at least 1 line.
In 2015-16, CDG dividend yield was 7c/$2.4 = 2.9% which is 2.9%-0.5% = 2.4% higher than risk free rate. CDG yield today is 4.95%, only 0.5% higher than risk free rate.
To widen the gap against risk free rate to 2%, either CDG boost dividends or FED cut rates. We need CDG to generate more PATMI and Powell to stay the course of lowering rates.
Look out for upcoming award of operating contract for JRL and CRL. CDG should have a good chance of securing at least 1 line.
MrBear12 ( Date: 19-Nov-2024 10:18) Posted:
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Quietly accumulate, but must hold for 5 to 10 years at least.
Just an improvement to 6 to 7 cents may see cdl reach 300, just as in the 2015 to 16.
Entropy72 ( Date: 19-Nov-2024 10:00) Posted:
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Here is the dividend data for ComfortDelGro from 2015 to 2023:
? 2015: 6.40 cents (interim: 3.39 cents, final: 3.01 cents)
? 2016: 6.96 cents (interim: 3.76 cents, final: 3.20 cents)
? 2017: 7.83 cents (interim: 4.55 cents, final: 3.28 cents)
? 2018: 7.83 cents (interim: 4.55 cents, final: 3.28 cents)
? 2019: 8.02 cents (interim: 4.63 cents, final: 3.39 cents)
? 2020: 3.98 cents (final only, no interim due to COVID-19 disruptions)
? 2021: 2.66 cents (interim: 1.58 cents, final: 1.08 cents)
? 2022: 3.73 cents (interim: 2.15 cents, final: 1.58 cents)
? 2023: 4.04 cents (interim: 2.18 cents, final: 1.86 cents)
Needs to return to the 7-8 cents dividend level to go above $2. With PATMI recovering, this is possible.
? 2015: 6.40 cents (interim: 3.39 cents, final: 3.01 cents)
? 2016: 6.96 cents (interim: 3.76 cents, final: 3.20 cents)
? 2017: 7.83 cents (interim: 4.55 cents, final: 3.28 cents)
? 2018: 7.83 cents (interim: 4.55 cents, final: 3.28 cents)
? 2019: 8.02 cents (interim: 4.63 cents, final: 3.39 cents)
? 2020: 3.98 cents (final only, no interim due to COVID-19 disruptions)
? 2021: 2.66 cents (interim: 1.58 cents, final: 1.08 cents)
? 2022: 3.73 cents (interim: 2.15 cents, final: 1.58 cents)
? 2023: 4.04 cents (interim: 2.18 cents, final: 1.86 cents)
Needs to return to the 7-8 cents dividend level to go above $2. With PATMI recovering, this is possible.
Here is the PATMI (Profit After Tax and Minority Interest) data for ComfortDelGro from 2015 to 2023 based on their annual reports and public disclosures:
? 2015: S$301.5 million
? 2016: S$317.1 million
? 2017: S$317.8 million
? 2018: S$303.3 million
? 2019: S$265.1 million
? 2020: S$61.8 million (impacted by COVID-19)
? 2021: S$115.2 million
? 2022: S$173.1 million
? 2023: S$180.5 million
1H24 PATMI is $152m. Full year PATMI $300m reasonable which is comparable to 2018-19 PATMI. Why is CDG not trading at 2018-19 prices of above $2? Dividend is still key.
? 2015: S$301.5 million
? 2016: S$317.1 million
? 2017: S$317.8 million
? 2018: S$303.3 million
? 2019: S$265.1 million
? 2020: S$61.8 million (impacted by COVID-19)
? 2021: S$115.2 million
? 2022: S$173.1 million
? 2023: S$180.5 million
1H24 PATMI is $152m. Full year PATMI $300m reasonable which is comparable to 2018-19 PATMI. Why is CDG not trading at 2018-19 prices of above $2? Dividend is still key.
ComfortDelGro ENGIE opens 1,000th charge point in Singapore, launches new app
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."
Ignore, his price target is based on recent shift in current market pricing, a drop of 5 cents target is negligible.
Asdfgh101 ( Date: 17-Nov-2024 12:43) Posted:
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Just wondering what this MayBank analyst is smoking...damages if any will be paid from cash, not earnings?...only drawback for this Addison Lee deal was the 6 Times paid...however in CDG's update it was mentioned gearing is currently 20% after this acquisition so not too whats the pessimism?
Maybank downgrades ComfortDelGro to &lsquo hold&rsquo on acquisition doubts
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.
CDG needs to raise its dividend further to get investor attention.
The 20% improvement in PATMI and revised dividend policy to pay out 70-80% (from 50% previously) will upsize dividend in Feb 25.
The 20% improvement in PATMI and revised dividend policy to pay out 70-80% (from 50% previously) will upsize dividend in Feb 25.
This fellow short sellers like to target.
Where is conman?
Where is conman?
MrBear12 ( Date: 15-Nov-2024 09:56) Posted:
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Market chose 1.46.
MrBear12 ( Date: 15-Nov-2024 08:28) Posted:
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