ComfortDelGro > Buy

Maybank Kim Eng, March 9

March 9 close: S$2.02

Target price: S$2.35

POTENTIAL acquisition of Uber by Grab could be positive for Comfort if it happens in Singapore, as the consolidation could reduce competition for the taxi industry. However, regulatory hurdles could block the deal.

The Ministry of Transport raised two positive points in the budget debate on March 7, 2018:

1) the rail fare could increase, and 2) further regulation of private-hire car services.

Comfort should benefit if there is any hike in the rail fare... We estimate every one per cent increase in rail fare will raise Comfort's FY19 estimate earnings before interest and tax (Ebit) by 0.05 per cent. Second, further regulation in the private-hire car services, operated by Uber and Grab, could benefit Comfort's taxi unit as it could further level the playing field.

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