What’s the latest on ComfortDelGro’s share price?

Analysts say further downsides to ComfortDelGro shares are ‘fairly limited’ with most of its weakness already priced in.

Singapore transport operator ComfortDelGro Taxi on Thursday 28 May 2020 announced that it will be halving taxi rental rates for drivers for the month of June, as the country begins to lift certain Covid-19 movement restrictions as part of phased reopening plans.

Rental waivers will range S$45 to S$86 per vehicle, depending on the make, model and age of the taxi.

Analysts: further downsides to ComfortDelGro stock appear ‘limited’

Following the announcement, ComfortDelGro’s share price fell 2% to hit an intra-day low of S$1.49 per share, based on live IG data.

Year-to-date, ComfortDelGro shares are down 37%. The stock had plummeted 35.5% between February and March this year, as the coronavirus pandemic worsened globally.

Based on ratings from four analysts, ComfortDelGro shares currently have a consensus 12-month price target of S$1.715, with Maybank and UOB providing the most optimistic projections.

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UOB analyst Lucas Teng upgraded his rating on the stock to a ‘buy’ alongside a lower ‘price-to-earnings based’ price target of S$1.82 per share (from S$2.15 previously).

He posits that any downsides from further transport disruptions are ‘fairly limited’, as, the share price ‘appears to have largely priced in’ the transportation sector’s weakness as a result of stay-home measures, from both its taxi segment as well as from rail ridership.

‘1H20 will see less-than-stellar performance, but the road ahead is likely to be more positive,’ he wrote.

DBS analysts, who maintained a ‘hold’ rating, pointed out that the company is also likely to benefit from the Singapore government’s wage support increase to 50% of worker salaries (for the first S$4600) on Tuesday 26 May – up from 25% previously for the transport sector.

Third month of rental waivers

Although this latest move is expected to push the company even further into the red, ComfortDelGro Taxi CEO Ang Wei Neng says he hopes that the 50% rental waiver for the month of June will help to ease some of the financial burden that drivers are facing.

‘Although the circuit breaker will end on 1 June, safe management restrictions are still in place in the first phase of reopening. Many will continue to work from home and a large number of businesses will still remain closed. Taxi demand, while it is expected to pick up somewhat, is not expected to return to normal anytime soon,’ he said.

‘We know that things will continue to be tough for our cabbies still but having already extended full rental waiver for the last two months, we are unable to do so for a third.’ ComfortDelGro had waived off all taxi rental fees for April and May 2020.

To boost driver income, ComfortDelGro Taxi says it also intends to ramp up efforts to secure more delivery jobs for cabbies – both through its delivery platform ComfortDelivery and other similar platforms – given that delivery services will continue to be allowed till end-September 2020.

To-date, ComfortDelGro Taxi has worked with close to 50 food and beverage outlets, including McDonald's, KFC and Pizza Hut, to offer its cabbies delivery job options. Close to 2,000 taxis have been successfully utilised to participate in delivery services for more than 800 food partners. Another 400 cabbies have also been redeployed to other alternative jobs.

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