ComfortDelGro Corporation Ltd: Point-to-point business struggles, but dividend helps
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- 2Q26 earnings at SGD45mn, -23% y/y; 1H26 earnings form 45% of our below consensus earnings, in-line
- Taxi and Private Hire segment continues to be the biggest drag on 2Q26 earnings with 48% y/y decline in OP
- Announced 3.91Scts DPS, unchanged y/y, representing 99% payout ratio
- Recommendation and TP under review
More details to follow post the analyst briefing on morning of Monday, 17 August 2026.
What’s New
ComfortDelGro Group (CDG) reported 2Q26 revenue of SGD1.3bn, up 6% y/y, while earnings declined 23% y/y to SGD44.6mn. Top-line growth was driven by the Public Transport segment, which rose 12% y/y on the back of new Victoria contracts in Australia and higher-margin contracts in the UK. This was partially offset by a 10% y/y decline in the Taxi & Private Hire segment, reflecting the continued reduction in Singapore's taxi fleet, intensifying competition in Australia, and attrition of premium B2B demand following the Middle East conflict. The earnings decline was largely attributable to the Taxi & Private Hire segment, where operating profit fell 48% y/y. The decline was disproportionately steeper than the revenue contraction due to negative operating leverage and an unfavourable business mix in the UK, following the loss of higher-margin B2B contracts. Despite the significant earnings decline, CDG maintained its DPS at 3.91 Scts, implying a payout ratio of 99%.
Our views
1H26 earnings accounted for 45% of our below-consensus FY26F estimate, broadly in line with the 1H25 contribution. Looking ahead, we expect a stronger 2H26 on a h/h basis, supported by improving UK bus margins and a recovery at Addison Lee following flight disruptions linked to the Middle East conflict, partially offset by continued competitive pressures in the Singapore and Australia Taxi & Private Hire businesses. However, we expect 2H26 earnings to decline y/y, as 2H25 benefitted from a substantial one-off SGD18.5mn gain from the disposal of the Victoria depot. The significantly higher payout ratio came as a positive surprise and underscores management's commitment to shareholder returns, likely aided by the current low interest rate environment. While operational challenges are expected to persist, we believe the share price should remain supported by the attractive interim dividend. We look forward to gaining further clarity on management's final dividend outlook at the upcoming analyst briefing. Should management signal a willingness to maintain the absolute dividend level, CDG would offer an attractive dividend yield of 6.3% based on the current share price of SGD1.35. If so, we believe there could be a strong positive share price reaction. Recommendation and TP are under review.
Quarterly segmental performance overview
Source: Company, DBS (Note: 3Q25 public transport operating profit include one-off SGD18.5mn Victoria bus depot disposal gain)
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