Comfort Delgro

[opmi]

51-49 split for the losses in a war of attrition with Grab. See who dies first.

CD acquire new shares or vendor shares in LCR?

[CY09]

The rental car company, lion city rental, isn't a high ROA business. Cars are being rented out at $50-$55/day, despite the 110k price tag of a car and the 2+k annual road tax and maintenance fee.

I guess CDG had to pay a price to tap into Uber's patented algo technology.

[Problem.Kid]

CIMB said Lion City Rental is in net debt of S$1bil as of Dec-16. So Comfortdelgro will also inherit the debt?

[CY09]

Yes, which is why CDG paid only $295 million in cash consideration for a 51% stake (note they inheriting only 51% of the debt if I am right)

[touzi]

I guess CDG had to pay a price to tap into Uber's patented algo technology.

What technology is that? What does it do?

[Layman A]

The rental car company, lion city rental, isn't a high ROA business. Cars are being rented out at $50-$55/day, despite the 110k price tag of a car and the 2+k annual road tax and maintenance fee.

I guess CDG had to pay a price to tap into Uber's patented algo technology.

Assuming they can rent out the car for 300 days per year  (about  82% utilization )

Total revenue = $50 x 300 x 10yrs = $150,000

Total car cost = $110,000
Road Tax = $2000 x 10 = $20,000

Assuming Maintenance cost about $1k to 2k per year.
Maintenance = $1500 x 10yrs = $15,000 

Total Profit = $150,000 - $110,000 - $20,000 - $15,000 
       
=  $5,000  for renting out the car for 10 years  !!!

Anything goes wrong they will incurred losses !

This kind of business can do meh ? 

[ianphoon]

The rental car company, lion city rental, isn't a high ROA business. Cars are being rented out at $50-$55/day, despite the 110k price tag of a car and the 2+k annual road tax and maintenance fee.

I guess CDG had to pay a price to tap into Uber's patented algo technology.

Assuming they can rent out the car for 300 days per year  (about  82% utilization )

Total revenue = $50 x 300 x 10yrs = $150,000

Total car cost = $110,000
Road Tax = $2000 x 10 = $20,000

Assuming Maintenance cost about $1k to 2k per year.
Maintenance = $1500 x 10yrs = $15,000 

Total Profit = $150,000 - $110,000 - $20,000 - $15,000 
       
=  $5,000  for renting out the car for 10 years  !!!

Anything goes wrong they will incurred losses !

This kind of business can do meh ? 

Your road tax of $2k a year is too high
Most of their cars are 1.6l
And the tax is $972 p year

[corydorus]

I guess CDG had to pay a price to tap into Uber's patented algo technology.

What technology is that? What does it do?

I do not think there are any rocket science in it that can give them significant edge in booking/pricing else grabs would have already fall apart and so are many taxi companies in the world who has their own apps.


Cory

[CY09]

For the estimation, I would lump road tax & maintenance tgt at a cost of $2,000 annually.

This means Lion City may earn 20k for renting out its cars over a 10 year period. However considering that it has to have cash upfront for a 10 year car and have to undertake loan for it, the annual returns is very low.

[weijian]

Interesting to see CDG expanding its sg taxi business vertically, to try to improve its moat alittle. I heard that Grab is close behind with tie ups with other petrol stations but Grab should be subsidizing them rather than making money like CDG? In addition, if this happens (both Uber and Grab private hire drivers get discounts), will EVERYONE sign up to become a private hire driver? (just to enjoy the (substantial) discount? (haha)) - ie. become like our VB Ben who drives 3hr daily/weekly etc just to qualify for it...

As for the street view that Grab may acquire Uber's SEA operations, does that mean everyone will be 1 big family and enjoy the same discounts eventually? As consumers of their services, we definitely hope this doesn't happen!

ComfortDelGro starts petrol retail business

TRANSPORT giant ComfortDelGro has started a petrol station business to serve its growing fleet of hybrid taxis, and possibly, a larger fleet of private-hire cars once its alliance with Uber is approved.
The Straits Times understands that petrol pumps at ComfortDelGro's Sin Ming Drive premises have been operating for close to a year, while another in Bukit Batok started up towards the end of last year. They will be joined by petrol pumps at two other company-owned locations later this year.

ComfortDelGro, as well as other taxi operators, has been selling diesel at discounted rates to its cabbies since the 1990s - a lucrative business which contributes tens of millions of dollars each year. But ComfortDelGro is the first to enter petrol retail. The move came after it added the Toyota Prius hybrid to its fleet in 2011. According to the Land Transport Authority, hybrids now make up 18 per cent of Singapore's total taxi fleet of around 23,000.

http://www.businesstimes.com.sg/companie...l-business