Brokers’ take: Maybank raises ComfortDelGro target to S$1.60 on higher earnings forecasts
Mia Pei
MAYBANK Securities has raised its target price for ComfortDelGro to S$1.60 from S$1.55 on better earnings prospects.
The target increase came with a maintained “buy” call, following ComfortDelGro’s recent measure to increase its taxi booking commissions by two percentage points with effect from Jan 1, 2024.
Maybank analyst Eric Ong noted on Tuesday (Jan 2) that the research house is positive on the transport operator’s surprising move to increase the booking commission, while making the existing 10 per cent rental waiver permanent for its drivers, despite competition from peers.
“The higher taxi revenue should help to more than offset the rising cost of maintaining and upgrading technology systems, as well as financial charges for cashless transactions,” said Ong.
He also expects ComfortDelGro’s taxi and private hire segment to continue to grow as inbound tourism to Singapore recovers.
Ong raised the earnings forecasts – driven mainly by higher contribution of the company’s taxi business – by 2 per cent for FY2024, and by 3 per cent for FY2025.
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Additionally, Maybank is also positive on the company’s earnings with the acquisition of Australian taxi network provider A2B Australia, announced on Dec 22 last year.
He noted that ComfortDelGro’s management believes in the deal’s potential to scale its point-to-point mobility business in Australia, and that the deal, when completed in the first half of 2024, can add about 2 per cent to its bottom line on a full-year basis.
“However, we have not factored the incremental contribution into our assumption as the transaction is still subject to approval from A2B’s shareholders, an Australian court and clearance from the Australian Competition and Consumer Commission,” he added.
As at 3.18 pm on Wednesday, shares of ComfortDelGro were trading flat at S$1.41.
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