While CDG’s public transport business was stable during the quarter, fuel costs are expected to increase on the back of rising oil prices. “Management said an indexation mechanism in the contracts will mitigate recent energy cost rises with forward hedges (up to 50% of volumes) in place to manage short-term timing differences,” says Ong.
CDG’s taxi and private hire segment also faces “strong headwinds” with “intensifying” competition in the business-to-consumer (B2C) mass market space.
“CDG[’s] fleet size continues to reduce along with the structural decline with overall Singapore taxi fleet population. [Its] Australia[n] network also contracted from keen competition from other ride hailing platforms, as well as cautious consumer spending,” Ong notes. “Despite higher average trip value[s], UK trip volumes were hurt by fewer airport transfers due to ongoing Middle East conflict.”
That said, Ong sees a bright spot in CDG’s Next-Generation Driving Centre, which will replace Bukit Batok Driving Centre by 2030.
On March 11, CDG announced that it will invest over $200 million in new training facilities, technologies and operations to meet “sustained demand for high-quality, school-based driver training” and to address the declining number of private driving instructors. The investment includes ComfortDelGro Driving Centre’s tender award of the $38 million site at Lorong Bistari, Choa Chu Kang, to develop and operate the Next-Generation Driving Centre.
“Upon completion, this project could potentially double CDG’s market share in Singapore and enhance the long-term financial performance of its Other Businesses segment,” says the analyst.
For FY2026, Ong estimates CDG’s revenue and core net profit to come in at $5.2 billion and $192 million respectively.
Shares in ComfortDelGro closed 2 cents lower or 1.39% down at $1.42 on May 13.
