Sorry SMRT but you’ve just lost millions to ComfortDelGro

Although an actual yield projection is not yet determined, the Down Town Line (DTL) could achieve a shorter breakeven period and ramp up ridership faster as compared to the North East Line (NEL) and Circle Line (CCL), says CIMB.

“[The rosy growth prospect is based on the fact that] DTL is built in existing residential and commercial estates, whereas the CCL, for instance, was built ahead of demand,” noted transportation analyst Lee Wen Ching at CIMB.

The tender to operate DTL, which is expected to start running in 2014 was awarded to SBS Transit, ComfortDelGro (CD)’s 75%-owned subsidiary. Having won the tender, the following are the growth opportunities which await CD, according to Ms. Lee:
 

The analyst however said that the benefits from the DTL will only materialise from FY14.

“Over the next two years, CD will incur higher operating expenses as it ramps up operations ahead of the commissioning of DTL. As such, CD may need to endure a margin squeeze before it can reap the fruits of this contract,” Ms. Lee said.

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