Trans-Cab promo rates applicable for one-man operations only
Model Taxi Age Promo rates ($/day) Usual rates ($/day) Reduction
Toyota Wish 5-8 yrs 68.48 96.30 -28.9%
Chevrolet Epica 3-4 yrs 85.07 108.07 -21.3%
Chevrolet Epica 4-5 yrs 79.72 102.72 -22.4%
Chevrolet Epica 5-6 yrs 77.58 100.58 -22.9%
Renault Latitude >3 yrs 94.70 121.98 -133.75 -25.9%


Credit Suisse, noting investor concerns about the impact of price competition in the taxi industry, said 
Trans-Cab’s rate cuts are more limited than what headlines in the media last week suggested

 

It highlighted that:

1. Rather than a broad-based reduction in rates, the cuts are limited to older vehicles and are largely for the less popular Wish and Epica models.

2. The discounted rates are only applicable for one-shift taxis.  

3.  Rates for the bulk of the fleet remain unchanged, with rates for the Renault Latitude (main model) at $122-$134/day.

4. This would imply that reductions in overall average fleet rental rates of Trans-Cab are only in the low-mid single digit range.

5. 
In recent months, ComfortDelGro has rolled out rental discounts of 50-60% for the first six months, but only for new drivers operating strictly on one-shift.

6. The revenue impact from the promotion is limited, considering that one-shift drivers are 
only 20% of ComfortDelGro’s taxi fleet, and its near-100% hire-out rate and negligible driver attrition.

6. ComfortDelGro 
has no intention to start a price war given its c.99% hire-out rate, choosing instead to continue its fleet renewal strategy.

LQM ad141eWith the advent of Uber/Grab, we expect a continued bifurcation of the taxi industry, where the scale advantages and network effect of ComfortDelGro’s dominant 61% market share becomes more apparent. This is evidenced by ComfortDelGro’s c.99% hire-out rate vs that of Trans-Cab at 89%.

We continue to like ComfortDelGro for its earnings resilience and potential upside to dividends in its FY16 results, and believe the market has not priced in ComfortDelGro’s recent acquisition of the remaining 49% stake in its Australian bus subsidiary, which is expected to add 4.8% to ComfortDelGro’s FY17E PATMI if approved. Maintain OUTPERFORM. 


-- Louis Chua, CFA, and Christopher Siow
(Credit Suisse report 5 Jan 2017)


Share Prices

Counter NameLastChange
AEM3.0200.060
$ Alliance Mineral0.3850.035
AusGroup^0.030-
Avi-Tech0.510-
Best World1.4150.025
China Sunsine0.910-
CWG Intl0.157-
Dutech0.375-
Federal Int0.4300.010
Food Empire0.645-
Geo Energy Res0.280-
Golden Energy0.4400.010
$ GSS Energy0.1540.002
Heeton0.520-
$ ISOTeam0.3450.005
KSH0.7800.010
Lian Beng0.705-
$ Miyoshi0.0720.001
Nordic0.5450.015
Oxley0.6600.020
$ Rex Intl0.051-
Riverstone1.0650.015
Roxy-Pacific0.560-
Sunningdale Tech2.1300.010
Serial System0.170-
SingHoldings0.470-
Sino Grandness0.205-
Straco0.850-
Sunpower0.620-
Tiong Seng0.375-
$ Trendlines0.152-
N/A0.2600.010
Uni-Asia Grp1.4150.005
XMH0.290-
YZJ Shipbldg SGD1.5250.005
Powered by JoomlaGadgets

NextInsight RSS

rss_2 NextInsight - Latest News

Online Now

We have 451 guests and no members online