With 12 daily flights operated by Emirates from Dubai to the three London airports, the impact has been keenly felt. For years, private hire company Addison Lee has been providing pick-up services for business class passengers flying Emirates under a contract with the airline, which includes the chauffeur service as part of the airfare.
According to a Financial Times report on April 17, the drop in passenger traffic to and from the Gulf has resulted in hundreds of drivers who rely on such work for up to 90% of their earnings.
ComfortDelGro (CDG), parent company of Addison Lee, in its 1QFY2026 business update on May 13, warns that demand from this business segment has been “impacted”, adding to a list of other worries, including higher fuel prices.
CDG’s GBP269 million acquisition of Addison Lee was an expansion of its presence in the UK, where it already operates taxis and public buses in Manchester, in addition to London.
Since the fighting broke out, CDG’s share price has dropped from $1.55 to as low as $1.27 on May 18, the lowest level seen in three years. Weighed down by a slew of bearish analyst calls, CDG’s share price has hovered just above that level since then.
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However, there are signs that the market is dialling back its negative stance. Just five weeks after downgrading ComfortDelGro from “hold” to “fully valued”, along with a lower target price of $1.11 from $1.60, Chee Zheng Feng of DBS Group Research has somewhat reversed his view on the land transport operator and upgraded the stock back to “hold”, along with a higher target price of $1.30.
In his most recent June 22 note, Chee, citing the drag from Addison Lee, expects CDG’s 2QFY2026 earnings to decline by 10%–15%. Chee warns of the impact from “significantly lower” flight frequency but is expecting a gradual recovery in the latter half of this year.
Also, with a more moderate inflation outlook in the UK, Chee is now of the view that margin compression in CDG’s UK public transport segment will be “less severe” than initial expectations.
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His view is further boosted by reasons such as “more restrained” wage demands by the unions, and the company’s continued success in securing new tenders at double-digit margins.
In addition, Vicom, CDG’s separately listed subsidiary, should benefit from a higher mix of high-margin mandatory on-board unit installations from Malaysian vehicles ahead of the new ERP system from Jan 1, 2027.
Chee has raised his FY2026 earnings estimates by 7% and FY2027’s by 12% to reflect a less bearish UK public transport outlook and higher margins at Vicom.
Due to “subdued” financing costs and “increasingly shareholder-friendly actions”, Chee expects a higher dividend payout ratio of 85% up from 80% now.
He notes that with three-month Sora trending at around 1%, CDG should be comfortable maintaining its current debt levels while placing greater emphasis on shareholder returns.
“In addition, the recent share buybacks suggest that shareholder returns may be a higher priority than we had previously expected,” he adds.
From a previously reduced target price of $1.11, Chee now values the company at $1.30, using a 5.1 times forward EV/Ebitda multiple, which is 0.5 standard deviations above its 5-year average, on higher FY2026 ebitda.
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“We believe the slight premium is justified by the potential for an 85% payout ratio. At our target price, the stock offers a yield of about 6%, which we believe aligns with investor expectations,” says Chee.
Key “upside” risks include an improving competitive landscape in taxi and private hire, while downside risks include a sharp spike in UK inflation and lower-than-expected dividend payout.
Shekhar Jaiswal of RHB Bank Singapore has another reason to stay cheerful about CDG. In his June 6 note, he cites the company’s progress in its sustainability efforts. As indicated in its most recent FY2025 annual report, CDG has already met its 2030 cleaner-energy car fleet target and exceeded its solar photovoltaics output trajectory.
“We see its ESG initiatives linked to financial resilience through fuel efficiency, targeted electrification capex, and green financing. Combined with fare-protected public transport earnings, strong cash flow, a robust balance sheet, and a FY2026 yield of around 5%, the recent share price weakness offers an attractive entry point,” says Jaiswal, who has kept his “buy” call and $1.45 target price.
This argument might have already been put into action by Silchester International, CDG’s largest shareholder. On May 21, the asset manager paid nearly $2.5 million, or an average of $1.2908 for 1,935,800 shares. This brings its total stake to 196,825,300 shares, equivalent to 9.087%, up from 8.998% previously.
Silchester first emerged as a substantial shareholder in November 2023, when its holdings exceeded 5%. The shareholdings fluctuated since then but have steadily increased in recent months.
