Uber’s decision to sell its Southeast Asian operations to Grab could either erode ComfortDelGro’s advantages or offer some key positives, OCBC said in a note on Monday.
The first possibility is that Grab can become the only third-party ride-hailing service in Singapore, allowing it to control bookings, OCBC said. That would erode Comfort’s competitive advantage of scale for ride-booking, it added.
The other possibility is that Grab would have a monopolistic position, allowing it to raise car rental rates, reduce subsidies and change fare structures, OCBC said. That would improve profitability and would be beneficial for Comfort, the bank said.
But OCBC noted that any consolidation in Singapore would still need regulatory approval.
“All said, we maintain our positive view on CDG with more stabilized taxi business coupled with limited downside as we continue to expect earnings to bottom-out in fiscal 2018,” OCBC said. It kept a Buy call with S$2.25 fair value.
The stock was up 4.02 percent at S$2.07 at 2:44 P.M. SGT.
