Make-or-break time for ComfortDelGro as competition heats up

Its once dominant taxi segment is being shaken.

The transport company is looking to bank on its strengths as it tries to avoid standing still in the face of rising competition.

According to analysts from UOB Kay Hian, ComfortDelGro would have the upperhand against newcomers as drivers will continue to find CD’s value proposition attractive in areas such as diesel subsidies, insurance coverage paid by CD and high call bookings.

“In addition, we believe the authorities could be relooking at potential issues such as regulations on quality, suitability of drivers, safety and insurance matters,” UOB Kay Hian said.

Meanwhile, UOB Kay Hian said that they are more keen on sustainable dividends compared to special dividend.

“While there is the potential for special dividends, we believe CD’s preference is for a sustainable growth in dividends. Hence, the transition to an asset-light bus model could see the group gradually raise its dividend payout,” UOB Kay Hian said.