Zurich Insurance

Zurich Insurance (ZURN SW) is a leading global insurer with a current price of CHF547. Although not rated in this report, Zurich Insurance’s strategic partnership with ComfortDelGro (CD) is noteworthy. Together, the two companies have launched a single-trip travel insurance policy for individuals and groups, which is available on ComfortDelGro’s Zig app. This innovative insurance product covers travel disruptions, including vehicle breakdowns en route to Changi Airport, and reimburses customers up to SGD1,000 for additional accommodation or travel expenses. This partnership highlights Zurich’s focus on customer-centric solutions and its adaptability in forging strategic collaborations to expand its reach.

Grab Holdings

Grab Holdings (GRAB US) currently trades at USD4.87 with a “BUY” recommendation and a target price (TP) of USD6.24. Grab continues to be a dominant player in the Southeast Asian ride-hailing and super-app ecosystem. The company’s diversified offerings, spanning transportation, food delivery, and digital payments, are at the forefront of its growth strategy. Despite heightened competition in the mobility sector, Grab remains focused on profitability, which is reflected in its robust market positioning and strategic initiatives aimed at cost optimization. Maybank Research remains optimistic about Grab’s potential for growth, driven by its extensive user base and continuous innovation in its services.

GoTo Gojek

GoTo Gojek (GOTO IJ) is another prominent player in the ride-hailing and digital ecosystem space, trading at IDR80.0 with a “BUY” recommendation and a target price of IDR95.0. The company’s integrated platform combines ride-hailing, e-commerce, and financial services, positioning it as a key competitor in Indonesia and the broader Southeast Asian market. Its focus on scalability and improving operational efficiency is pivotal in its growth trajectory. With a strong domestic market presence and continuous expansion into adjacent sectors, GoTo Gojek is poised to capture a significant share of Indonesia’s growing digital economy.

ComfortDelGro

Overview and Current Status

ComfortDelGro (CD SP) is a diversified land transport conglomerate operating across Singapore, Australia, the UK/Ireland, and China. Currently trading at SGD1.46, the company has a “HOLD” recommendation with a 12-month target price of SGD1.60. The company’s operations span public transport, taxis, and rail services, with Singapore contributing 73% of its earnings before interest and tax (EBIT), followed by Australia (18%), China (7%), and the UK/Ireland (2%). Public transport accounts for 44% of its EBIT, while the taxi and private hire segment contributes 39%.

Key Developments

• ComfortDelGro has partnered with Zurich Insurance to launch a travel insurance product via its Zig app, offering coverage for travel disruptions.
• The company has increased its platform fees by 30-50 cents, effective January 1, 2025, to address higher operating expenses resulting from the implementation of the Platform Workers Act.
• Two more ride-hailing operators, Trans-cab and Geo Lah, are set to enter the market in 2025, intensifying competition in Singapore’s peer-to-peer (P2P) mobility space.

Expansion of Premium Offerings

To differentiate itself from competitors like Grab and Gojek, ComfortDelGro is expanding its premium transportation services. The company has introduced a new fleet of Toyota Alphard Hybrid taxis, offering limousine-style service with luxury features such as ventilated seats, ottoman and massage functions, spacious interiors, and advanced charging options. This complements its existing fleet of high-end vehicles, including the Mercedes Viano, Toyota Vellfire, Mercedes E-Class, and Lexus ES300 models.

Financial Performance and Projections

For 4Q24, ComfortDelGro expects core profit after tax and minority interests (PATMI) of SGD57 million, representing a 2% quarter-on-quarter increase. This is attributed to margin improvements from UK bus contract renewals, offset by lower revenue from bus operations in Singapore and a shrinking taxi fleet. The company’s FY24-26 earnings per share (EPS) projections remain unchanged, with a target price of SGD1.60.

ESG Initiatives

ComfortDelGro is making strides in environmental, social, and governance (ESG) practices. The company is phasing out diesel vehicles in favor of hybrid and electric vehicles and has implemented energy-efficient measures across its operations. Highlights include a 17% reduction in greenhouse gas (GHG) emissions intensity (short of its 20% target), 70% hybrid vehicles in its taxi fleet (target: 100%), and achieving its solar photovoltaic output target. However, only 80% of its public buses are wheelchair accessible, falling short of the 100% target. ComfortDelGro’s overall ESG score is 73, reflecting high transparency and robust disclosure practices.

Outlook

Despite facing challenges from rising operating costs and increased competition, ComfortDelGro’s strategic focus on premium services, ESG initiatives, and geographical diversification positions it for steady growth. Investors are advised to maintain a “HOLD” position as the company navigates these headwinds.