4 Things Investors Should Know About ComfortDelGro Corporation Ltd’s Public Transport Services Business

ComfortDelGro Corporation Ltd (SGX: C52) is one of the world’s largest land transport companies. It has seven business segments and operations in seven countries (Singapore, China, the United Kingdom, Ireland, Australia, Vietnam, and Malaysia).

In this article, I want to highlight important information about ComfortDelGro’s largest business segment – Public Transport Services – that was shared in the company’s latest 2016 annual report. I’m also going to focus specifically on the bus-related part of the Public Transport Services segment.

Here’re the key pieces of information [Editor’s note: An article discussing six more key things to know about the bus business has been published. It can be found here.] :

1) In Singapore, ComfortDelGro’s bus operations comes mainly from its Singapore-listed subsidiary, SBS Transit Ltd (SGX: S61). In 2016, SBS Transit operated about 3,000 buses and 202 bus routes, including one premium bus service. Nearly all of SBS Transit’s bus routes – 193 of them are wheelchair-accessible.

2) SBS Transit transitioned to the BCM (Bus Contracting Model) in September 2016 after the expiry of its Bus Service Operating Licence on 31 August 2016. Under the BCM, the Land Transport Authority pays SBS Transit a fee to operate bus services while fare revenue goes to the LTA. SBS Transit is operating 196 bus routes under eight bus contracts. These contracts last between two years and 10 years, with the average length being seven years.

SBS Transit’s fleet of buses are also leased to the LTA, while the company continues to operate from its existing bus interchanges, terminals and depots. So, SBS Transit now has an asset light business model whereby it merely operates bus services. In the past, the company’s business was asset heavy as it had to own buses in order to run bus services.

3) At the end of 2016, SBS Transit operated about 60% of the bus services in Singapore.

4) ComfortDelGro is also Singapore’s largest private bus chartering company with a total fleet of 348 buses. The chartering services include employee and school bus charters, overland bus services to West Malaysia, premium bus services, and shuttle bus services for industrial parks, shopping malls, educational institutions, and condominiums.

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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 Lawrence Nga doesn’t own shares in any companies mentioned. Motley Fool Singapore has a recommendation for SBS Transit.