Land Transport

Land Transport: Maybank-KE reckons that the increasing traction of new players in Singapore's taxi industry looks set to shake up the market. The two app-based taxi booking entrants channel passengers to their existing network of taxi drivers and private vehicles, which may potentially translate into a loss of taxi booking income. However, Maybank-KE's analysis suggests minimal impact on the profitability of taxi operators- a hypothetical scenario of a 20% plunge in booking income translates into 3.4/ 4.3% potential loss on ComfortDelgro/ SMRT's operating income. Conversely, house argues that these new entrants would augment the overall revenue pool of the taxi industry, benefitting public transport operators in the long run, as it seeks to grow the taxi booking pie, currently at a low penetration rate of 10% of taxi journeys. Maybank-KE forecasts a 5ppts increase in penetration over the next three years, translating into an additional $52m in revenue, or $5.16 per taxi/day. However, this should be offset through higher rental fees by the operators. Overall, house has an Underweight rating for the sector, but prefers ComfortDelgro (Buy, TP $2.40) over SMRT (Sell, TP $0.50), due to its lower exposure to the loss-making fare-based business in Singapore.