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Key Differences Between ComfortDelGro and SMRT That Investors Have To Know

busIf you are looking at investing in the transportation industry, there might be a couple of choices for you to choose from. You can decide to invest in air travel through Singapore Airlines (SGX: C6L) or Tiger Airways Holding (SGX: J7X). You can also decide to invest in shipping through Neptune Orient Lines (SGX: N03).

However, for the Singaporean public, the most familiar (and perhaps, similar) companies in the transportation space would have to be ComfortDelGro Corporation (SGX: C52) and SMRT Corporation (SGX: S53); the two are in charge of running most of Singapore’s public transport services

Despite the familiarity that most would have with both companies (given how they touch most Singaporeans’ lives almost daily), it would still be interesting – and important – to understand the differences between the two.

Key difference No.1: International exposure

The first and key difference between the two companies is actually their geographical exposure. ComfortDelGro is in fact, the second largest transport company in the world. Besides operations in Singapore, it has businesses in China, Vietnam, Malaysia, Australia, the United Kingdom, and Ireland. International revenue accounts for about 50% of its total sales and the company is constantly looking for ways to increase its international presence.

SMRT on the other hand, focuses purely on Singapore with interests in almost all types of land-based public transport services such as rail, buses, and taxis. Most of the company’s revenue is generated from its rail segment.

Key difference No.2: Other transport-related businesses

ComfortDelGro has investments in other types of transport-related businesses. One example would be its 67%-owned subsidiary, Vicom (SGX: V01). The subsidiary provides inspection and testing services for the vehicle market and other industries such as Oil & Gas, Aerospace, Marine, and Construction, amongst others .

Meanwhile, SMRT also has other ancillary revenue streams that are somewhat related to public transport. But, it’s very different from what ComfortDelGro has; SMRT’s main transport-related business comes from renting out retail and advertising space found in its bus depots, train stations, and buses.

However, with the new public bus contracting model that was announced this May, the government would become owner of the infrastructure and assets – including the depots and buses – that are related to SMRT’s bus businesses. With advertising and rentals being an important part of SMRT’s earnings picture, it is not yet clear how the new model will affect this particular segment of SMRT’s business.

Foolish Summary

So there you have it, the two key differences between ComfortDelGro and SMRT. For investors looking to invest in the public transportation sector, it is important to understand those differences in order to make a better judgement on how similar/different their businesses might perform in the future.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.