COMFORTDELGRO

COMFORTDELGRO | BUY

FAIR VALUE: $2.25

MARCH 21 CLOSE: $2

OCBC Investment Research, March 21

In the few months up to Jan 18, we saw encouraging taxi operational indicators, which we view as positive for ComfortDelGro.

First, we noted three consecutive months and five consecutive months of year-on-year growth in the industry average engaged mileage recorded for one-shift taxis and two-shift taxis, respectively. Second, we also noted that month-on-month growth in rental cars was more subdued, while the rate of decline in taxi fleet size slowed down for the more significant taxi operators.

In our view, these indicators point to a more stabilised environment for the taxis and private-hire car services.

Separately, during the Singapore Budget 2018 debate, the Ministry of Transport highlighted two points, which we believe are positive for ComfortDelGro:

1) Fares are likely to rise, moving forward, and

2) Regulations on private-hire car services are likely to increase.

For now, one catalyst to look out for would be the pending regulatory approval of ComfortDelGro's alliance with Uber.

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