TDVL issued in April was almost four times more than a year ago, while the cumulative number of TDVL issued for 4M18 grew 114.4% y-o-y. The 410 TDVL issued in April exceeds the most recent high of 399 issued in April 2016.
“We believe this a reflection of the shift in demand to drive taxis; and corroborates the recent activity by ComfortDelGro to purchase 200 new hybrid taxis and calling for a tender to supply an additional 500 hybrid taxis,” says analyst Richard Leow in a Monday report.
Phillip recently highlighted in its Land Transport sector update on June that 40% of private-hire car drivers have not attained their Private Hire Car Driver's Vocational Licence (PDVL); and the deadline for doing so is 30 June.
With the reduction in driver incentives by Grab, the viability of driving a taxi as a career with a stable income is becoming more attractive among existing private-hire drivers, according to the analyst.
“We believe the surge in TDVLs issued is due to private-hire drivers intending to drive taxis instead and have decided not to attain the PDVL,” says Leow.
Despite 1,368 new TDVLs issued during 4M18, the number of valid TDVL holders has contracted by 190 or 0.2% year-to-date. This means new issues have not been able to offset the natural attrition of licence expiries so far.
However, going by the historical trend, Leow thinks a sustained average of about 400 new TDVLs monthly would be sufficient to reverse the decline and result in growth in number of valid TDVL holders.
“We maintain Overweight on the Land Transport sector, on the positive industry restructuring following the exit of Uber and the worst being over for the Taxi industry. We maintain our Accumulate rating on ComfortDelGro, with unchanged target price of $2.69,” says Leow.
As at 3.39pm, shares in ComfortDelGro are down 3 cents at $2.29
