New UberFLASH service could up bookings for Comfort taxis, says Maybank KE

An UberFlash ride option is shown on the Uber app in this illustration photo. PHOTO: REUTERS

SINGAPORE - Maybank Kim Eng maintained a 'buy' call on ComfortDelGro with a target price of S$2.40 citing potential benefits from a new service with ride hailing company Uber known as UberFLASH.

UberFLASH, which was introduced on 19 Jan, matches Uber riders with the nearest vehicle, whether a Comfort taxi or an uberX private hire car. In addition, it will mean dynamic pricing - where fares go up or down based on demand and supply - for Comfort taxi drivers when bookings are made through UberFLASH. This could level the playing field with other private hire vehicles, wrote analyst John Cheong in a research report.

"We view this positively, as the addition of Comfort taxis into the platform should increase the booking jobs of taxi drivers and reduce waiting time of riders," said Mr Cheong. "More importantly, improved earnings for taxi drivers will reduce the declining demand to rent and drive Comfort taxis."

UberFLASH fares would be, on average, 5-10 per cent cheaper than an uberX private hire car, Uber and Comfort have said.

Rival Grab introduced a similar service known as JustGrab some ten months ago, in partnership with the other five taxi firms in Singapore, including SMRT and Transcab.

Comfort is Singapore's largest taxi operator with nearly 13,700 taxis here under its Comfort and CityCab brands, while Uber has a fleet of about 14,000 vehicles.

In his report, Mr Cheong also highlighted other key catalysts for Comfort, namely completing the 51 per cent acquisition of Uber-owned rental car business Lion City Holdings, as well as narrowing losses for the rail segment this year on the back of revenue from Downtown Line (DTL) 3. DTL 3 commenced in October 2017.

Maybank Kim Eng estimates that rail EBIT loss could shrink from S$25 million to S$5 million in financial year 2018.

Comfort shares closed at S$2.01 on Thursday and were trading four cents higher at 10.30am on Friday morning.

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