Maybank Investment Bank Bhd (Maybank IB) has maintained its HOLD recommendation for ComfortDelGro (CD SP), citing a lack of compelling catalysts to drive the stock in the near term. Despite the company's recent initiatives, such as its partnership with Zurich Insurance to offer travel insurance via its Zig app, the research house remained cautious.

The insurance policy, covering travel disruptions to Changi Airport, reimburses up to S$1,000 for additional accommodation or travel costs. However, the research house did not revise their financial year 2024 (FY24-FY26) earnings per share (EPS) or target price, leaving it unchanged at S$1.60.

ComfortDelGro has recently raised its platform fees by 30-50 cents, increasing the range to S$1.00-1.20, starting in January 2025. The move comes in response to higher operating costs due to the implementation of the Platform Workers Act. While the fee hike aims to defray the increased expenses, analysts expressed concerns over the potential impact on consumer demand, particularly as competition in the ride-hailing market intensifies with the entry of two new operators, Trans-cab and Geo Lah, in 2025. These concerns were underscored by the continued decline in Zig app booking volumes in 3Q24, which fell to 6 million compared to 6.7 million in 1Q24.

To differentiate itself from close competitors like Grab and Gojek, ComfortDelGro is expanding its premium offerings with a fleet of new Toyota Alphard Hybrid taxis, offering a luxurious experience with features like ventilated seats, massage functions, and multiple charging points. These taxis join the existing fleet of high-end vehicles, including the Mercedes Viano and Lexus ES300, catering to the growing demand for premium transportation services.

Looking ahead to its 4Q24 results, analysts expect ComfortDelGro to report core PATMI of S$57 million, reflecting a 2% quarter-on-quarter increase. However, this will likely be offset by a one-off transaction cost of around S$2 million related to the acquisition of Addison Lee (AL). The acquisition will contribute almost two months of profits, but it is expected to be cancelled out by the associated costs. The research house noted that the continued margin improvement from UK bus contract renewals should help offset lower bus operations revenue due to the handover of the Jurong West package and a reduced taxi fleet size in Singapore.

Despite the recent challenges, Maybank IB saw ComfortDelGro's prospects as steady but unspectacular. With a market capitalisation of S$3.2 billion, the company remains a significant player in the global land transport sector. However, with limited growth drivers at present, Maybank IB continues to maintain a neutral stance, awaiting a better entry point for potential investors.