ComfortDelGro - Diesel tax to become usage-based instead of lump-sum tax
- Budget 2017 had certain measures announced to address environmental concerns over vehicular emissions.
- Particularly for the taxi industry where diesel usage is high, the government announced that diesel taxes will be restructured from lump-sum tax (special tax levied on diesel taxis payable annually) to usage-based tax (based on volume of diesel used). This S$0.10/litre diesel duty was effective yesterday and will be levied on automotive diesel, impacting the taxi drivers.
- However, at the same time, the government has also announced that the annual special tax on diesel taxis will be reduced permanently by S$850, which in our view will allow ComfortDelGro (CDG) to pass on some of these savings back to the taxi drivers to help the drivers partially or fully offset the increase in the diesel costs.
- Hence, for now, we assume a cost-neutral outcome for CDG and keep our forecasts unchanged. Maintain BUY with an unchanged FV of S$2.95.