Bus business could uplift ComfortDelGro amidst rail operation losses

Its Bukit Merah bus contract will start by Q4.

ComfortDelGro (CDG) could seal further growth through its public transport business as its new Bukit Merah bus contract will commence on Q4 2018, OCBC Investment Research said.

In addition, the firm’s public transport business was also bolstered by contributions from its acquisition of FCL which is a bus business in New South Wales, RHB analyst Shekhar Jaiswal noted.

“This is despite continuing losses being reported by its Singapore rail business, which CDG now expects to break even only by Q2 2019 or Q3 2019,” Jaiswal explained.

Also read: ComfortdelGro H1 profits fell 12.7% to $141.3m

“In Singapore, rail ridership continued to grow but operations continued to incur losses as the fare revenue was not sufficient to cover rising operating and maintenance costs,” the firm noted.

For Q2, the firm’s profits slipped 5.5% YoY to $75m from $79.4m in Q2 2017, even with a revenue increase of 5.4% YoY to 941.1m from $893.1m.