ComfortDelGro’s taxi competition to offset rail gains in Q4 2024

Its public transport segment is set to grow with fare hikes, contract renewals, and higher rail ridership.

ComfortDelGro’s (CDG) bid for an overseas rail contract in Copenhagen is estimated to be earnings accretive, UOB KayHian reported.

“We estimate that the Copenhagen contract is worth around €1.5b with operating margins of 8%. We understand that CDG’s stake in this upcoming tender is less than 50%. Assuming a 45% stake and a straight-line depreciation over 12 years, we estimate an annual operating profit uplift of €5m-6m ($7m-8m),” UOB KayHian said.

For Q4 2024, UOB KayHian expects CDG’s public transport segment to benefit from the higher rail ridership and ongoing UK bus contract renewals. The group’s domestic rail ridership grew 1.6% year-on-year (YoY) on 24 December 2024, driven by return-to-office mandates.

“With higher domestic rail ridership, we reckon that the ongoing upward momentum in domestic rail ridership would help support revenue growth for CDG’s public transport segment in 4Q24.

"Moving forward, the implemented 6% price fare hike in late-Dec 24 is expected to boost segmental profitability going into 1Q25,” UOB KayHian said.

Meanwhile, UOB KayHian expects CDG’s taxi segment to post robust growth due to additional contributions from A2B which the group acquired in March 2024.

On the flip side, UOB KayHian noted that domestic market competition, with the entry of Geo Lah and Trans-cab Services in Singapore, may pose downside risks to CDG’s online booking volumes, further impacting its taxi commission.

“Given CDG’s strong earnings growth and a decent 2025 dividend yield of 5.9%, we maintain BUY with a target price of $1.77,” UOB KayHian said.

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