Higher fares and rail ridership boost ComfortDelGro’s Q1 margins

Its A2B acquisition will boost CDG’s taxi segment earnings starting Q3.

Higher fares and rail ridership, coupled with increased taxi commission rates, are set to boost ComfortDelGro to a strong start in Q1.

The company’s rail ridership in January and February 2024 have already surpassed pre-pandemic levels (2019), reports UOB Kay Hian. This is 100.4% and 104.5% of 2019 levels, respectively.

This, coupled with higher rail fares, will boost SBS Transit’s revenue to rise by S$20.9m in 2024. CDG owns 74.4% of SBS Transit.

“As domestic rail ridership continues to recover, we expect a similar uptrend in March 24 which would help boost Q1 profitability for CD's public transport services segment, backed further by higher rail fares implemented in December 2023 along with increased margins from ongoing UK bus contract renewals,” said UOBKH analysts Llelleythan Tan Yi Rong and Heidi Mo.

ALSO READ: ComfortDelGro receives shareholders approval for acquisition of A2B Australia

CDG’s proposed acquisition of A2B Australia, a P2P taxi booking and payments player in the market, is expected to be earnings accretive.

Currently, CDG owns 9.25% of A2B, and its takeover scheme is valued at around A$182m. The transaction is expected to cost around S$150m (A$165m) and will be funded through existing cash and bank facilities.

A2B is the number two P2P personal mobility player in Australia which facilitates taxi bookings, trips and payments. 

New contributions will register from Q3 2024 onwards and drive earnings growth in CDG’s taxi segment.

“As A2B's pre-COVID-19 (FY18-19) operating profit was around A$20m, we reckon that there is still potential upside and recovery given that FY23 operating profit was only A$10.5m,” said Tan and Mo.

Join Singapore Business Review community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!