During the second half of 2023, there is likely to be a big increase in the number of people using public transportation, especially trains. According to RHB, an increase in tourist arrivals will trigger the upswing. The surge in ridership is expected to have an impact on ComfortDelGro, with its taxi businesses experiencing a reduction in rental rebates in Singapore, and China’s economy rebounding after the cessation of the two-year zero COVID-19 strategy.
Increased dividends on the horizon thanks to strong free cash flow
Even though the increase in ridership will cause some problems, there will be a lot of free cash flow, which will allow ComfortDelGro to pay out more dividends.
Retention of Bukit Merhah and Jurong West Bus packages in Singapore, but with lower margins
ComfortDelGro will keep the Bukit Merah and Jurong West Bus Packages going in Singapore, but the contracts may have less money in them if they are extended.
The expected rise in train ridership in the second half of 2023 will have a big effect on ComfortDelGro’s taxi businesses because Singapore is cutting back on rental rebates and China’s economy is picking up. Despite this, the company’s strong free cash flow will allow it to provide higher dividends.
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Even though keeping the Bukit Merah and Jurong West Bus Packages in Singapore is a good thing, the company may have a hard time making money if the contracts are extended for less money. As the tourism industry continues to grow, it will be interesting to see how ComfortDelGro adapts to the changing landscape.
