COMFORTDELGRO CORPORATION LTD (SGX:C52)
ComfortDelGro - Rationalising Competition; Grab’s Growth Strategy An Incremental Positive For Comfortdelgro
Grab to list in the US through SPAC deal
- Grab’s stated growth strategy in its investor deck is an incremental positive for ComfortDelGro (SGX:C52) because the former is shifting towards financial services and delivery, from ride-hailing. This supports our thesis of moderating competition between taxi and private hire car players in Singapore.
- Any weakness in ComfortDelGro's share price represents a good opportunity to accumulate. Maintain BUY on ComfortDelGro with a DCF-based target price of S$1.88 (WACC 8.2%, LTG 1%).
Delivery and financial services taking driver’s seat
- Grab Holdings will list in the US by merging with Altimeter (AGC US), a special-purpose-acquisition company (SPAC). The merger is slated to complete in Jul’21. The Singapore-based “super app” is set to have a market value of ~ US$39.6b after the merger.
- From Grab’s investor presentation, the “super app” market leader in Southeast Asia is forecasting its addressable market to expand 350% to US$180b by 2025 from US$52b in 2020. Its total gross merchandise volume (GMV) grew 2.5% to US$12.5b in 2020, which was driven by a 90% growth in food deliveries to US$5.5b, offsetting a 43% drop (to US$3.2b) from its ride-hailing divisions.
- Going forward, its financial services and delivery businesses are expected to be the key GMV drivers, which would make up 76% of Grab’s GMV by 2023.
Rationalising competition
- Grab’s incentives to drivers and merchants fell by 49% y-o-y in 2020 as it started shifting car players in Singapore, which is a positive development for ComfortDelGro (see initiation report ComfortDelGro - Maybank Kim Eng 2020-05-17: Comfort In The Unknowns).
Transport recovery still in play
- The listing of Grab could potentially post share price weakness for ComfortDelGro, as some investors may normalises from COVID-19. Further easing of social distancing measures remains a near-term catalyst for ComfortDelGro.
- Potential revision of the rail framework could lead to an additional 49% upside (S$0.043) to our ComfortDelGro's FY21 EPS forecast to S$0.13.
- See ComfortDelGro Share Price; ComfortDelGro Target Price; ComfortDelGro Analyst Reports; ComfortDelGro Dividend History; ComfortDelGro Announcements; ComfortDelGro Latest News.
Kareen Chan
Maybank Kim Eng Research
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https://www.maybank-ke.com.sg/
2021-04-15
SGX Stock
Analyst Report
1.880
SAME
1.880
