ComfortDelGro Corporation: Monopolising SG public bus ad space, but net benefit likely minimal
- ComfortDelGro’s advertising arm, Moove Media, awarded seven-year contract to manage advertising on all public buses and at bus interchanges, with a possible two-year extension from 1 Nov 25
- Ad operations for public bus sector consolidated under single operator to give advertisers wider reach and ad operator economics of scale
- Moove Media to pay Land Transport Authority (LTA) SGD150mn in fees over seven years, while previously bus operators retain all non-fare revenue
- Limited profit upside but removes overhang of complete loss of bus ad profits; Maintain BUY with TP of SGD1.80
What’s New
Singapore’s Land Transport Authority (LTA) has awarded ComfortDelGro's advertising subsidiary, Moove Media, a seven-year contract to manage and operate advertising spaces across all public buses and bus interchanges, starting 1 Nov 25. The agreement includes a potential two-year extension. The contract includes an option for a two-year extension. This marks the first time advertising operations across the public bus network will be consolidated under a single operator, offering advertisers broader reach and enabling Moove Media to benefit from economies of scale. The agreement covers advertising rights for approximately 5,800 buses and 30 bus interchanges. Moove Media will begin managing ad operations for 9 of the 14 bus packages starting 1 Nov 25, with the remaining 5 packages (under SBS Transit) to be progressively added as their existing contracts expire. Previously, individual bus operators retained all non-fare revenue. Under this new arrangement, Moove Media holds exclusive rights to public bus advertising but will pay the government SGD150 million in fees over the contract period. Moove Media currently manages advertising for Tower Transit and Go-Ahead, which operate 3 packages collectively in exchange for a fee, while SMRT manages ads for 3 other packages independently.
Our views
We believe this change will have a minimal net impact on overall earnings. While Moove Media may benefit from increased revenue from SMRT contracts, greater pricing power, and lower operating costs under a monopoly model, it is now required to pay concession fees directly to LTA, even for existing contracts. As such, any incremental earnings are likely to be largely offset by the additional fees payable to LTA. Nonetheless, this arrangement removes the overhang of a potential complete loss of bus ad profits. Maintain BUY with TP of SGD1.80.
Access more at DBS Insights Direct
GENERAL DISCLOSURE/DISCLAIMER
The information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively, the “Company”). This report is intended for “Accredited Investors” and “Institutional Investors” (defined under the Financial Advisers Act and Securities and Futures Act of Singapore, and their subsidiary legislation), as well as “Professional Investors” (defined under the Securities and Futures Ordinance of Hong Kong) only. It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained herein does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or residents of the United States of America) where such distribution, publication, availability or use would be contrary to law or regulation. The information is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be contrary to law or regulation.
This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) which is Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Singapore recipients should contact DBS Bank Ltd at 65-6878-8888 for matters arising from, or in connection with the report.
DBS Bank Ltd., 12 Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore 018982. Tel: 65-6878-8888. Company Registration No. 196800306E.
DBS Bank Ltd., Hong Kong Branch, a company incorporated in Singapore with limited liability. 18th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
DBS Bank (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability. 13th Floor One Island East, 18 Westlands Road, Quarry Bay, Hong Kong SAR.