ComfortDelGro (C52.SG) is flat at $1.62 with 655,000 shares traded in a muted reaction to news its wholly-owned Chengdu subsidiary has been awarded 800 new taxi licences by the Chengdu Municipal Government, making it the second largest operator in Chengdu with 1050 taxis. 

JPMorgan, which has an Overweight rating and $2.00 target price says the addition of 800 taxis “implies an 8% increase in its China taxi fleet and is positive.” 

It adds, the latest move “is a strong demonstration of the company's capability to drive growth organically even in the absence of attractive M&A targets.” 

 

BNP Paribas, which rates the stock at Buy with a $1.98 target, says the new licenses carry a reasonable cost at CNY10,000 per license per year, “which we believe lowers the capex burden and enhances working capital management, and could potentially suggest even higher margins than its taxi operations in tier-one cities, a sentiment and fundamental positive.” 

 

Near-term resistance is tipped at $1.64.