ComfortDelGro - OCBC Investment 2017-10-04: Grab’s Discount Campaign Extended To 6 Oct

ComfortDelGro - OCBC Investment 2017-10-04: Grab’s Discount Campaign Extended To 6 Oct COMFORTDELGRO CORPORATION LTD C52.SI

ComfortDelGro - Grab’s Discount Campaign Extended To 6 Oct

  • According to a recent news report, private hire car service provider, Grab, has dealt yet another blow to ComfortDelGro’s (CDG) taxi business by extending its aggressive discount campaign for the second time by another week to 6 Oct 17.
  • Recall that Grab’s campaign offers S$50 discount per day for six months to CDG’s taxi hirers if they switch over to any of Grab’s taxi-fleet partners (i.e. Transcab, Prime, SMRT and Premier), and even higher discounts if they rent a private-hire car directly from Grab. 
  • The report also stated that the number of CDG’s taxi hirers who may switch to Grab has increased to more than 3,000 drivers. 
  • In our view, this exodus of drivers could spell trouble for CDG as its taxi earnings are heavily dependent on rental income – the sudden and significant reduction in taxi hirers will certainly impact its taxi revenue, and translates to weaker operating margins. 
  • Having already incorporated deep cuts to our assumptions over its taxi business in an update report dated 18 Sep 17 (See report: ComfortDelGro - Wave After Wave of Bad News), we are keeping our forecasts unchanged for now, pending 3Q17 results announcement. Maintain HOLD with S$2.12 Fair Value Estimate on ComfortDelGro, but we recommend accumulating at S$1.90 or lower.




Eugene Chua OCBC Investment | http://www.ocbcresearch.com/ 2017-10-04
OCBC Investment SGX Stock Analyst Report HOLD Maintain HOLD 2.120 Same 2.120



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