ComfortDelGro recovery in 2021 likely: analyst

Resurgence of COVID-19 cases still a threat for the company.

Transportation group ComfortDelGro (CDG) is well on its way to recovery after a significant slowdown of transport activities in April and May.

In a report, OCBC Investment Research noted gradual recovery in most geographies in which the transport company operates in.

This was seconded by head of research at Phillip Securities Research, Paul Chew, who said that ComfortDelGro’s revenue rebounded $152m quarter-on-quarter (QoQ) to $816m in the latest quarter reported. Operating losses also narrowed by $118m compared to the previous quarter.

The transport company benefitted from the easing of movement restrictions in several countries, OCBC added. However, whilst activity levels gradually improved in most geographies in Q3 after the relaxation of lockdown measures, its England operations remains up in the air after the 3-tiered restrictions in the marekt became a full lockdown in November.

“Various other restrictive measures were also in place in Scotland, Ireland and Wales. CDG recognised an impairment provision of $17.5m for UK Taxi and regional coach businesses,” OCBC added.

However, Phillip Securities Research's Chew saw that Singapore’s readiness to enter Phase 3 will help CDG increase their transportation volumes.

Aside from a possible resurgence of COVID-19 cases, OCBC mentioned that aggressive marketing campaign and expansion by Grab or Gojek and losing bus contracts without any corresponding wins for other bus routes as the top threats for the company.

Chew also added that rail ridership was only 55% of pre-COVID levels in January.

ComfortDelGro’s net profit rose from $99m in FY2020 to $256m in FY2021.