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Hot Stock: ComfortDelGro stock falls after losing tender to rival SMRT
COMFORTDELGRO stock fell on Monday on news that it had lost the tender to operate the Thomson-East Coast (TEL) line to competitor SMRT. According to the Land Transport Authority (LTA), ComfortDelgro's bid paled in comparison to SMRT both on quality and price evaluation as its service fee was 30 per cent higher than SMRT's offer of S$1.7 billion.
The counter was actively traded on Monday morning with 9.73 million shares worth S$19.92 million done. As at 12.31pm, ComfortDelgro's stock fell six Singapore cents or 2.83 per cent to S$2.06. It eventually closed at S$2.07 on Monday - down 5 Singapore cents - with some 14.8 million shares changing hands.
OCBC Investment Research said: "While the outcome of this tender does not affect our forecasts, it changes ComfortDelgro's outlook now that it has lost a significant growth catalyst. In addition, with Grab's aggressive promotion of car rental discount, we see further downside to our earnings forecasts should more than expected number of taxi hirers switch over to drive for Grab."
Therefore, the research house is putting both its rating and fair value estimate of ComfortDelgro under review for now.