ComfortDelgro

ComfortDelgro: Taxi operators except for Comfort have struggled to comply with new taxi availability standards implemented in Jan. The standards – measured half-yearly – were to address taxi under-utilisation. They include the need for operators to operate taxis for a min no. of peak hours and miles a day. Financial penalties and loss of fleet expansion rights follow failure to do so. Regulators are giving operators until the year end to comply, but smaller operators (eg. Prime, Smart taxi) will likely still fall short of standards given challenges they face in optimizing a smaller fleet. Rising fixed costs and the overhang from failure to meet the regulatory standards could spur a sector consolidation in the next 12-18mths. This could present an opportunity for Comfort to emerge as a strong contender for these assets, and would help drive company earnings growth. While Credit Suisse keeps its Market Weight rating and TP $2.10, the house highlights Comfort’s improved earnings profile from recent acquisitions.