Comfort shares sink on double dose of bad news
ComfortDelGro shares closed at S$2.01 on Tuesday, down 2.9 per cent from the previous day, after sinking to an intraday low of S$1.995. That was the lowest since April 9, 2014, when the shares fell to S$1.98. Photo: Nuria Ling/TODAY
SINGAPORE — ComfortDelGro shares continued on a downward spiral on Tuesday (Sept 19) to hit their lowest level in nearly three-and-a-half years, as investors deserted the stock in droves after two blows to the transport operator’s business last week.
ComfortDelGro shares closed at S$2.01 on Tuesday, down 2.9 per cent from the previous session, after sinking to an intraday low of S$1.995.
That was the lowest since April 9, 2014, when the shares fell to S$1.98.
About 20.6 million shares worth S$41.6 million changed hands on Tuesday, making ComfortDelGro the fourth most actively traded counter by value on the Singapore Exchange.
ComfortDelGro shares have lost more than 18 per cent of their value this year, while the benchmark Straits Times Index has risen about 12 per cent.
Last Friday, the Land Transport Authority announced that SMRT Trains beat SBS Transit — a subsidiary of ComfortDelGro — in the tender to operate and maintain the Thomson-East Coast Line, which will open in stages from 2019.
Earlier that day, TODAY reported that more than 2,000 ComfortDelGro taxi drivers could jump ship and join rival operators partnering ride-hailing firm Grab or switch to become drivers of its private-hire car service. That came less than a fortnight after Grab dangled heavily-discounted rental rates to woo ComfortDelGro cabbies, as part of an offer that will run until Sept 29.
Analysts said the double whammy of bad news hurt investor sentiment in ComfortDelGro, although they added that a positive outcome from the taxi operator’s talks with ride-hailing giant Uber over a potential tie-up could spark a share price rebound.
CMC Markets analyst Margaret Yang said competition was heating up, with ride-hailing firms like Uber and Grab usurping market share from traditional taxi operators.
She added, however, that investors should wait for ComfortDelGro’s upcoming release of third-quarter earnings as well as news on the potential ComfortDelGro-Uber tie-up, before making their next move.
In an announcement filed with the Singapore Exchange last month, ComfortDelGro — which had nearly 15,500 taxis under its Comfort and CityCab brands as of July — said the exclusive talks with Uber include making its fleet available on Uber’s app.
The potential collaboration could include teaming up on fleet management and booking software solutions, although the company added that there was “no certainty or assurance” the talks would result in an agreement or an alliance materialising.
Any “major news” from these discussions could be a catalyst for a rebound in its stock price, said Ms Yang.
DBS Group Research analyst Andy Sim also said that positive developments from a tie-up could help lift ComfortDelGro shares.
Ms Yang said that since the two ride-hailing firms set up shop in Singapore, traditional taxi operators have been threatened. With deep pockets, the ride-hailing companies have been able to dish out incentives to lure passengers. The prospect of ComfortDelGro losing a sizeable number of drivers as part of the on-going Grab recruitment drive was also “quite bad”, she noted.
Mr Sim said the news from the recruitment campaign had “definitely weighed on sentiment”, and the market was still concerned over whether the repercussions on its taxi business would materialise.
Under its campaign, Grab is offering a daily S$50 discount for six months on rents for existing ComfortDelGro drivers to join any of Grab’s five partner taxi firms: Trans-Cab, Prime Taxi, SMRT Taxis, Premier and HDT Singapore Taxi. The discounts are higher if drivers switch to a private-hire car via Grab’s rental arm, GrabRentals.
