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ComfortDelGro expands into patient transport in Australia with A$30m buy

Singapore

COMFORTDELGRO Corp will continue to be an active acquirer of smaller ticket deals like its latest A$30 million (S$30.2 million) purchase of an Australian patient transport service, analysts said on Monday.

But views are split on whether and how the land transport company's appetite for larger deals is affected by the pending merger between its ride hailing rivals Uber and Grab.

ComfortDelGro on Monday said that it is buying National Patient Transport (NPT), a provider of non-emergency patient transportation services in Victoria, New South Wales and Western Australia.

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The purchase, which is subject to regulatory approval, is priced at 4.6 times NPT's earnings before interest, tax, depreciation and amortisation. The consideration will be paid from internal resources.

ComforDelGro currently runs public scheduled bus services in New South Wales and Victoria, and taxi services in Western Australia. NPT will give the group an adjacent business in land transport services, ComfortDelGro said.

NPT owns a fleet of 144 vehicles that provide a range of healthcare transport services to major metropolitan hospital networks, including walker, hoist and stretcher transport services, and specialist services for high acuity and complex patients. It also operates a registered training organisation and is qualified to deliver and assess a range of non-emergency healthcare transport, first aid and resuscitation courses in Australia.

ComfortDelGro chief executive and managing director Yang Ban Seng said in a statement: "This is an exciting opportunity for us to expand into an adjacent area of land transport services. It enables us to leverage on our core capabilities in contract, fleet and manpower management whilst broadening our breadth of skills. The non-emergency patient transport business is experiencing strong growth and one that shows great potential with ageing populations in much of the developed world."

Analysts observed that ComfortDelGro has been an active acquirer over the past few years, with a number of small-ticket deals.

The NPT investment is "very small and I don't expect it to move the needle", UOB Kay Hian head of research Andrew Chow said. "But it tells me that they are quite cashed up and they are looking to do these smallish but accretive developments."

DBS Group Research analyst Andy Sim said that NPT was an interesting foray into the healthcare space for ComfortDelGro, whose traditional businesses are in taxis, buses and trains.

"But the broad theme is still mature markets," he said.

The analysts were split, however, on how much ComfortDelGro's appetite for new deals is affected by the pending acquisition of a majority stake in Singapore private-hire rental business Lion City Rentals - an investment that hangs in the balance amid a potential merger between Lion City owner Uber and its rival Grab. ComfortDelGro could fork out S$642 million, comprising S$295 million in cash and the rest in borrowings, for that acquisition.

"I think they won't want to do any major mergers and acquisitions until the Uber-Grab saga is done," Mr Chow said. "Everything hangs in the balance depending on that merger."

But Mr Sim said that a number of these smallish acquisitions may be the fruition of years or months of discussions that began before the Lion City Rentals deal.

"I don't think these things happen overnight," he said. "I think there's a fair bit of uncertainty from the analyst's point of view, but I don't think it's affecting their appetite. Their balance sheet is still relatively strong."

ComfortDelGro shares closed uncharged at S$2.08 on Monday.

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