Comfort Delgro

[CY09]

Comfortdelgro has been doing national service all along... And, I wonder why. Does anyone still remember the years of losses that SBS suffered until the recent revamp of the entire bus bidding system?

Hi Holymage interesting observation. Just curious which year period was that. As far as I Could recall, SBS has been making profits since 2007

[holymage]

CY, you are right. I remembered incorrectly. I recalled that SBS had very poor financial performance before the Bus Contracting Model (2016). I just checked, to rephrase, it should be substantial declining profits from $54 million (2010) to $11 million (2014) to $16 million (2015), due to rising capital and operating expenses, while being tightly regulated on fares (national service).

[weijian]

CY, you are right. I remembered incorrectly. I recalled that SBS had very poor financial performance before the Bus Contracting Model (2016). I just checked, to rephrase, it should be substantial declining profits from $54 million (2010) to $11 million (2014) to $16 million (2015), due to rising capital and operating expenses, while being tightly regulated on fares (national service).

I believe SBS was making big money (like SMRT did) until GE2011 came along when the Aljunied GRC folks did everyone a National Service. Subsequently, after that election, SBS/SMRT had to start to carry the National Service torch.

[CY09]

Hi Weijian,

Yes, I have been a follower of land transport companies and that's why I found it strange when it was mentioned that SBS made losses.

CDG has several moats such as Vicom which has a stronghold on vehicle inspection due to government regulations as well as the driving centre in which CDG is a major player. If I recall the government controls who can inspect vehicles and who can teach driving/riding very tightly through the licenses granted; so far CDG has been the beneficiary and have profited.

Therefore, in my view, to ask them to do national service during tough times is fair when the regulators gave them a moat to profit during the good times

[holymage]

Weijian, care to share how the Aljunied GRC folks did everyone a National Service?

Looking at CDG's 2019 annual report, operating profit from (1) inspection and testing services, and (2) driving center contributes $45 million out of $416 million. 11% contribution, this can't be considered huge.

[touzi]

CDG doing National Service? What other companies, which hire large number of Singaporeans, have to do National Service?

COMFORTDELGRO TAXI EXTENDS RENTAL RELIEF TILL SEPTEMBER, GOES INTO THE RED

Cabby Tan Soon Huat, 61, who has been with ComfortDelGro Taxi for 27 years, says this is the worst he’s seen. “Business is not good so any form of help or rebates from the Company and the Government is welcome. I'm not sure how long more the COVID-19 situation would last and I appreciate that the Company is trying its best to help us by extending the rental reduction and waiving the call levies until end of September. It's a difficult time for everyone now. For me, I will continue taking any jobs that come my way."

https://links.sgx.com/FileOpen/Media%20R...eID=602828

Is this national service or just a business calculation? If there is no rental relief, more drivers may return the taxi which will just be sitting there. CD provide some relief and govt also chip in a little, in the end taxi drivers still pay some rental to CD.

[opmi]

I am more curious about how are the private hire car rental companies are doing. Meaning those that rent out the actual cars to full-time drivers and part-time drivers.
If these companies goes down, Grab/Go-Jek want to ride-hail also cannot....

[weijian]

@touzi,
As in all things in life, there is no clear black and white. The truth is probably somewhere in between "NS" and "business calculation"

CDG seems to be giving more, earlier and voluntarily. Contrast this with the REIT land owners, whom their customers are complaining about the delay/non transparency of the reliefs meant for them, and eventually forcing the Gov's hand to pass a law to outlaw the holding back of reliefs by the landlords.

@opmi,
Private hire car rental companies still own these hard assets (abeit depreciating). If the crisis does not end up longer than the lifetime of a COE, even if the car rental companies experience insolvency, I think their income-generating assets (cars) will be attractive to companies/people looking for bargains. Someone will be there to pick up the slack and become the new supplier if the prior supplier went bankrupt. For example, wouldn't it be a bargain if we can buy up 3year old cars with a price say their 2 year residual value? (That's a value investment!)

Don't forget, there is record amount of liquidity at the side lines going into this crisis and we are still in the secular cycle of low investment returns (there is more supply of capital from the baby boom generation, than demand for capital investment).

[CY09]

@opmi, while its indeed true Ride hailing does depend on rental cars, there is also the aspect of Singaporeans who drive grab with their own car.

If demand falls for ride hailing, Drivers on the rental car model will definitely leave the market. However for drivers who own their own cars, they will be stuck in the ride hailing industry, furthermore as it is difficult to find jobs now, they definitely have to do ride hailing.

Its like an analogy of an oil company owning the rig vs another oil company that leases the rig. At low oil price, the one who owns the rig may be forced to keep drilling because he had already paid the PPE cost upfront while the one on leasing model can opt to leave the game if his cashflow can be used in a better place

[opmi]

@opmi, while its indeed true Ride hailing does depend on rental cars, there is also the aspect of Singaporeans who drive grab with their own car.

If demand falls for ride hailing, Drivers on the rental car model will definitely leave the market. However for drivers who own their own cars, they will be stuck in the ride hailing industry, furthermore as it is difficult to find jobs now, they definitely have to do ride hailing.

Its like an analogy of an oil company owning the rig vs another oil company that leases the rig. At low oil price, the one who owns the rig may be forced to keep drilling because he had already paid the PPE cost upfront while the one on leasing model can opt to leave the game if his cashflow can be used in a better place

weijian & CY09,  I agree with what you guys mentioned. 

To add, even those who owned the cars have loans with banks or private credit companies. Some marginal car buyers may add the extra Ride-hailing income as part of purchase calculation.
The ride-hailing ecosystem probably more fragile than expected...

We will see in a few months time..