• Keep BUY and SGD1.70 TP, 15% upside and 6% FY25F yield. ComfortDelGro, along with other ride-hailing players in Singapore, have increased the platform fee. This increase covers the rise in costs, mainly related to the employer's contribution to the Central Provident Fund (CPF) amidst the implementation of the Platform Workers Act. While we see no material impact on earnings from the platform fee hike, our positive outlook on CD remains as we expect the taxi business' competitive intensity to ease and the group's earnings growth momentum to sustain in the quarters ahead.
• Increase in platform fees. Starting 1 Jan 2025, the ride hailing service providers in Singapore (ie Grab, Gojek, Tada and CD's Zig), have hiked the platform fee at 20-50 SG cents. CD has raised its platform fee by 30-50 SG cents, from a flat rate of 70 SG cents to a range of SGD1 to SGD1.20 based on distance travelled and travel time. The rise in platform fees is designed to offset the additional expenditure associated with the implementation of the Platform Workers Act. According to the Act, the main new costs for platform operators would be the mandatory employer's CPF payment for workers (compulsory for those born on or after 1 Jan 1995 and optional for older workers). Platform operators will begin by contributing 3.5% of a worker's net earnings in 2025. This will increase gradually until it reaches the level of contributions made by non-ride-hailing or delivery companies in 2029. We see no material impact on the earnings from this increase in platform fees.
• CD is offering fixed driver commissions to boost bookings and app usage. CD has fixed its commission at 70 SG cents a ride for all app- and phone-booked rides until the end of Feb 2025. This compares with the previous 7% commission on fares collected from app- and phone-booked rides for journeys costing more than SGD9. The move is expected to encourage more drivers on CD's Zig app to increase the availability and supply of rides. It is also expected to increase the driver's earnings on average. While CD is yet to share the booking numbers, we expect the impact to be positive.
• Remain positive on the outlook. We reiterate our positive view on CD, as its strong earnings growth remains supported by the continued improvement in the UK public transport margins, contributions from the Australian bus tender wins, and the acquisition of Addison Lee in the UK. CD's 2025F-2026F dividend yields at 6-6.5% remain above market yield. Our unchanged TP includes a 6% ESG premium to the stock's fair value, based on its 3.4 ESG score vs the 3.1 country median.

Source: RHB Research - 6 Jan 2025