Analysts warm to idea of Uber-Comfort tie-up
Taxi operator ComfortDelGro's collaboration with ride-hailing giant Uber Technologies has yet to be confirmed, but stock analysts are already warming to the idea of a tie-up.
Since Comfort said last Tuesday that it was in talks with Uber over a potential alliance, several research houses have issued their thoughts on the ways it could benefit the firm.
Investors also seemed pumped about the news, with Comfort shares soaring about 9 per cent last Wednesday, although they have since lost some ground to profit-taking.
RHB Securities Research analyst Shekhar Jaiswal noted that, amid elevated competition from Uber and Grab, Comfort's taxi revenue was down 11 per cent in the second quarter from a year earlier.
Its Singapore taxi fleet shrank 7.5 per cent from the end of last year to 15,556 vehicles as at June 30.
"ComfortDelGro's competitors in the taxi industry are already collaborating with Grab, and the company has struggled to improve its booking system to match the competition from Grab," said Mr Jaiswal.
He noted that any increase in bookings for Comfort taxis would depend on fares being competitive and comparable to those for Uber's own service, as well as a seamless integration of its booking system with Uber's.
OCBC Investment Research said in a report that an alliance could help Comfort expand its booking reach by leveraging on Uber's booking technology.
But Maybank Kim Eng analyst John Cheong noted that the management of Uber's vehicles, repair and maintenance would not contribute much towards Comfort's revenues.