Covid-19 has impacted transport activity significantly in Singapore and overseas. In Singapore, the ‘circuit breaker’ means that activity will slow significantly in April and May, and depending on the trajectory of the virus situation, there is the potential that recovery may be slow.
See: ComfortDelGro Taxi extends relief measures worth total of $116 mil till June 1
On the back of this, shares in CDG has corrected by some 40% year-to-date, compared to the STI’s 21% fall.
In an Apr 24 report, OCBC says, “The taxi segment has been most impacted, and we estimate that this is likely to be loss-making, partly due to the rental waivers and reliefs that have been extended.”
Additionally, the group will benefit from the government’s Jobs Support Scheme given the higher percentage of local employees, and for the group’s public bus operations in Singapore, it is not exposed to fare revenue, as it operates under the bus contracting model.
“Still, we are cognisant of the possibility of mileage revisions by the authorities because of Covid-19,” adds OCBC.
As for rail, ridership is likely to be impacted by Covid-19, lengthening the time required to attain breakeven for the Downtown Line.
Nonetheless, the research house is positive on the group’s long-term.
CDG’s net gearing remained low at 1.3% as at end FY19, and the group is in a position to undertake more acquisitions when the opportunity arises.
As at 12.10pm, shares in CDG are trading 1.40% higher at $1.45.
