ComfortDelGro to open Downtown Line 2 in 2016, ahead of schedule

To boost ailing Downtown Line 1.

It was originally scheduled for end-2015, but the opening of Downtown Line 2 was forecast for mid-2016 after a contractor went into insolvency. Now, however, Singapore transport minister Lui Yuck Tew announced that the DTL2 MRT will be opened in 1Q16, a few months ahead of schedule.

According to a report by OCBC, the transport minister added that additional manpower as well as innovative work processes helped accelerate the project and all the contractors will continue to do so in a bid to try to bring forward the opening to even earlier than 1Q16.

As at 2QFY14, CDG recorded loss of S$6.2m from its Downtown Line 1 (DTL 1) operations but OCBC estimates CDG to breakeven on its start-up costs in the period between phase 2 and phase 3 of the whole DTL project.

Here’s more from OCBC Investment Research:

With the opening of DTL 2 brought forward by a few months and possibly even earlier, we believe this is good for CDG as this would also logically allow it to breakeven earlier as well. Beyond its breakeven point, we expect CDG to be able to cover the licensing fee charged by LTA through revenue generated from DTL and hence see meaningful income contribution. Furthermore, we believe ridership will improve significantly given that the DTL 2 comprises 12 stations and one depot, including four interchange stations, where we expect traffic flow to increase considerably. We also believe the advertisement and rental business segments, which offer higher margins, to further boost revenue and profitability.