Could reforms redeem Comfort DelGro’s loss-making bus operations?

Analysts are upbeat about the upcoming government-contracting model.

The transportation company continues to report stable growth across all of its segments, and it seeks to iron out the creases in its currently-unprofitable bus segment by adapting a new contracting model.

Analysts from RHB said clarity on payment terms for its existing buses under the new contracting model and winning of the upcoming bus tenders will turn the tide around for the bus segment.

“We expect CD to continue reporting stable growth across all business segments, especially in bus and taxi businesses, which together account for about 80% of its operating profit,” RHB said.

Meanwhile, Comfort DelGro’s profit grew by 6.8% to SGD47m in 1Q16.