"While the hike was below our initial estimates, it was only marginally so and has immaterial impact to our FY26F earnings estimates," says DBS on Oct 15, adding that the increase reflects the government’s intent to smooth consumer cost increases and pare back subsidies.
DBS expects an incremental earnings increase of $11.7 million in FY2026 over FY2025, which will translate to $8.7 million at the ComfortDelGro level, all else constant.
"We expect mid-single-digit fare rises over the next three years to clear the deferred allowable increases, barring significant economic headwinds or a resurgence in inflation.
DBS noted that SBS Transit's rail operations returned to a small profit of $0.9 million in FY2024 and appears to be on track for sequential profitability improvements in FY25 and beyond.
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However, these improvements should partially offset lower bus earnings from the loss of the Tampines package from 2HFY2026.
As at 3.27 pm, ComfortDelGro shares changed hands at $1.47, unchanged for the day.
