ComfortDelGro seeks value from Australian assets, including through IPO or partial sale

TRANSPORT operator ComfortDelGro is exploring options to unlock the value of its Australian assets, which could take a variety of forms including a partial sale of assets or an initial public offering.

It now operates in six states and territories in Australia, where it is one of the largest privately-owned bus operators, the group said on Wednesday after posting a 56.1 per cent rise in first-quarter net profit.

Chairman Lim Jit Poh, who had indicated in the group's 2020 annual report that plans were "afoot to unlock the Australian assets", said: "As part of a strategic review of our businesses, and a new focus on renewable energy, we have been looking at our global portfolio to see where we can unlock value for shareholders as well as invest in new technologies including electrification."

With a total investment of S$1.17 billion to date, the Australian market is the group's single largest overseas investment destination, with public scheduled bus, private coach charter, ambulances, taxis and outdoor advertising operations.

For the year ended Dec 31, 2020, the Australian businesses chalked up a revenue of S$608 million, making it the best-performing overseas market.

In Q1 FY21, the market contributed 19.7 per cent of total revenue, after the UK and Ireland's combined 21.5 per cent. Operating profit for Australia was the highest among overseas markets, increasing 17.4 per cent to S$16.9 million. (see amendment note)

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The group first began operations in Australia 16 years ago through the acquisition of Sydney bus operator, the Westbus Group.

Wholly-owned ComfortDelGro Corporation Australia (CDC) operates Hillsbus and Forest Coach Lines in Sydney, as well as other regional bus companies in New South Wales. It also operates essential bus services across the western and eastern suburbs of Melbourne, and in regional Victorian cities.

It is the largest bus operator in the Northern Territory; in Queensland, it provides public passenger bus services, school services and special-needs bus services.

Another wholly-owned subsidiary, National Patient Transport, is the largest private operator of non-emergency patient transport services in Australia. It also runs a registered training facility that offers a range of non-emergency health-care transport, first aid and resuscitation courses.

In a separate business update, ComfortDelGro said group Q1 net profit increased 56.1 per cent to S$56.2 million, with Covid-19 government reliefs lifting results.

Operating profit for the three months ended March 31 came in 45.4 per cent higher at S$81.3 million. Without government reliefs, operating profit would have dropped 14.3 per cent to S$47.9 million.

Total revenue, which included government reliefs of about S$8.1 million, dipped 0.7 per cent to S$856.3 million. The group said business outlook is improving with the gradual resumption of economic and social activities on the global level.

Revenue for public transport services, the group's largest segment, increased by 1.4 per cent to S$665.6 million. In Singapore, there was lower rail revenue with ridership recovery currently around 65 per cent of January 2020 levels. In Australia, public transport schedules remained stable.

Revenue from the taxi segment was down 6.3 per cent to S$119.7 million while revenue from automotive engineering services fell 16.3 per cent to S$42 million due to a smaller Singapore taxi fleet.

Total operating costs dipped 3.9 per cent after including government reliefs of S$25.3 million.

The counter closed flat at S$1.63 on Wednesday.

Amendment note: The article has been amended to reflect that the UK and Ireland market, not Vietnam and Malaysia, contributed 21.5 per cent of Q1 revenue.