Singapore Transport Sector Braces for Increased Competition
Maybank Research Pte. Ltd. | April 10, 2025
ComfortDelGro Maintains Defensive Positioning Amid New Street-Hail Operator License
Singapore’s transport regulator LTA recently awarded a street-hail service operator license to GrabCab, bringing the total number of taxi operators to 6 in the city-state. While increased sector competition is on the horizon, the actual impact might be somewhat muted as street hailing volumes have been on a secular decline and account for only 10-11% of total point-to-point (P2P) trips.
Grab’s Entry Likely to Take Time for Fleet Expansion
Grab’s taxi license comes 9 months after it abandoned the proposed purchase of taxi operator TransCab, as the competition watchdog CCCS had raised concerns about potential barriers for rival platforms. The regulator approved the license as GrabCab intends to organically grow its taxi fleet. There will be a 3-year grace period for the operator to progressively expand its vehicle fleet to meet the minimum requirement of 800 taxis.
ComfortDelGro Adopts a Wait-and-See Approach
As the largest taxi operator in Singapore with a 63% market share (8,255 taxis), ComfortDelGro is closely monitoring GrabCab’s moves. The real challenge for the new entrant lies in attracting enough drivers, as taxis are typically hired out on 2 shifts and there is already a tight supply of cabbies. ComfortDelGro is adopting a wait-and-see approach on GrabCab’s rental rates and incentives, as well as the pace of its fleet expansion, before taking any decisions on new measures.
1Q25 Results Preview: Expecting Strong YoY Growth
For its 1Q25 results, we expect ComfortDelGro to report core PATMI of SGD58m (+2% QoQ; +45% YoY), driven by contributions from the Addison Lee acquisition, continued margin improvement in UK bus contract renewals, but partially offset by lower Singapore bus operations due to the handover of the Jurong West package.
Despite the recent share price weakness, we like ComfortDelGro for its defensive earnings profile, given the group’s domestic exposure in each respective market with relatively inelastic demand, notwithstanding the risk of an economic slowdown.
