Wednesday, January 16, 2013

Comfort Delgro

Comfort Delgro: Grp attended CS Asean conference. On taxis, mgt expressed confidence that the co will be able to fulfil the new taxi availability standards, as their taxis are well utilised through a double-shift ratio in excess of 80% (compared to a low 20% we estimate for its competition). On SBS Transit’s bus operations, management believes that upward adjustment in fares is likely, given the Minister of Transportation’s comment that cost and fare growth has been “mismatched” over the last few years. Elsewhere, BSEP-related fleet expansion would be “cost-neutral” to existing operations through offsets. Rail business profitability would likely become accretive as DTL phase 2 is completed in 2015. Meanwhile, expect profitability to take a temporary decline as start-up costs for the new line are significantly front-loaded.

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