Transport Land

Transport Land: On the rise of chauffeured vehicles services, Nomura reckons it has the potential to create turmoil in an otherwise stable competitive landscape for Singapore's taxi industry.

The house cited that while there is limited near-term impact as private hire vehicle services are still small, when they do manage to achieve critical mass, there may be key implications which includes:
1) Potential market share erosion;
2) Lower room to raise taxi rentals and higher spend on incentives to drivers; and
3) Pressure to improve taxi availability, especially in peak periods.

With that, Nomura prefers ComfortDelgro (Buy, TP: $3.59) given its superior cash flow generation, potential for higher dividends and diversified earnings profile.

For SMRT (Neutral, TP: $1.55), key concerns include its rising operating costs on planned capacity expansion and prospect of higher asset renewal capex.