Worst over for ComfortDelGro’s taxi business, PhillipCapital says

ComfortDelGro taxiComfortDelGro taxi

The worst appears to be over for ComfortDelGro’s taxi business amid a growth in bookings and capex for new hybrid taxis, Phillip Capital said in a note on Friday.

It noted the taxi operator announced an uptick in bookings through its call center and phone app for the first five months of the year, with bookings up nearly 9 percent on-year for May. The growth was attributed to Uber’s exit from the market and to ComfortDelGro’s promotions to passengers, it said.

Additionally, the company purchased 200 new hybrid Hyundai Ioniq taxis in early May and then called for a tender to supply 500 more hybrid taxis, it noted.

“Purchase of new taxis and bookings growth are signalling the worst is over. The 200 taxis purchased was the first capex in 1.5 years for new taxis,” Phillip Capital said.

It added that it expected losses from the Downtown Line would narrow as ridership increases.

“This should positively mitigate the impact from the transition of North East Line (NEL) and Sengkang LRT and Punggol LRT (SPLRT) to the new rail financing framework (NRFF), which has an EBIT margin cap of 5 percent,” it said. EBIT stands for earnings before interest and taxes.

After adjusting its outlook for taxi revenue, capex and rail ridership, Phillip raised its fiscal 2018-19 profit after tax and minority interests (PATMI) foreccasts by 2.3 percent and 5.3 percent, respectively.

It raised its target price to S$2.69 to S$2.48, keeping an Accumulate call.

The stock ended Friday down 2.44 percent at S$2.40.

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