ComfortDelGro shares climb after winning first overseas rail contract
The transport operator has won a billion-dollar contract to operate rail services in Auckland, New Zealand.
- ComfortDelGro (SGX: C52) shares climbed 2.5% to S$1.65 on Friday (27 Aug)
- The group was awarded a S$1.13 billion rail service contract in Auckland
- This would be the transport operator’s first rail operation outside of Singapore
- Last week, the group announced plans to list its Australian subsidiary on the ASX
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ComfortDelGro wins first overseas rail contract
ComfortDelGro shares rose 2.5% on Friday, after announcing it has won a rail franchise contract in Auckland, New Zealand.
The group, through its joint venture Auckland One Rail (AOR), was awarded a S$1.13 billion contract to operate rail services in Auckland, after a 12-month long tender process.
AOR is a 50:50 joint venture company between ComfortDelGro and UGL Rail Services, an Australian rail operations and maintenance company under the CIMIC Group.
This marks ComfortDelGro’s first foray into the New Zealand land transport market. The contract will commence on 16 January 2022 and is for an initial term of eight years with the opportunity for further extensions.
The Auckland Rail network is the largest in New Zealand and comprises four lines representing 185 km of track, 42 stations and 72 three-car electric multiple unit (EMU) trains and eight diesel multiple unit trains.
This will grow to 44 stations and 95 EMU trains from the opening of Auckland’s new City Rail Link, which is planned to occur in 2024, and is expected to result in a significant increase in rail patronage. Pre-pandemic, the network had an annual ridership of 21 million.
ComfortDelGro’s Managing Director Yang Ban Seng said: ‘This marks a very significant milestone in our history. It not only represents our first rail operation outside of Singapore but also our maiden entry into New Zealand. We are excited to leverage our experience of operating and maintaining Singapore’s world-class MRT system and are looking forward to delivering connected, safe and reliable customer journeys for Auckland’s travelling public.’
ComfortDelGro to list Australian subsidiary on ASX
Last week, the group’s shares rallied 5%, after it announced plans to pursue an initial public offering (IPO) on the Australian Stock Exchange for its wholly-owned Australian subsidiary, ComfortDelGro Corporation Australia Pty Ltd (CDC).
The proposed listing has been planned for the last quarter of 2021. It will seek to unlock the value of the group’s ‘significant’ land transport business assets in Australia.
With a total investment of S$1.17 billion to-date, Australia is now the group’s single largest overseas investment destination. For the year ended 31 December 2020, the Australian businesses generated revenue of S$608 million.
On the proposed IPO, ComfortDelGro Chairman, Lim Jit Poh, had stated that ‘the time is now right to share this Australian growth story with Australian investors’.
Start trading ComfortDelGro shares today
The blue-chip stock has gone up 3.1% in the last one month. It has a consensus rating of ‘outperform’ and target price of S$1.93 (equating to a potential 17.7% upside), based on the latest SGX StockFacts analyst data.
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