SINGAPORE (Oct 31): DBS Group Research says the competition and level of subsidies seen during the Grab vs Uber era are unlikely to return.

This is because the outcome of the first round of competition has not been particularly smooth for the players and the acquisition of Uber’s Singapore operations by Grab had resulted in fines by the competition watchdog.

On Monday, Grab’s next rival Go-Jek started pre-registration for drivers in Singapore, with about 1,000 potential drivers having signed up, according to media reports.

DBS says it seems the launch of the Go-Jek app for consumers is around the corner, to leverage on the year-end holiday season.

Based on media reports, Grab intends to improve on its service rather than raise subsidies. That said, Grab has launched a new driver rewards programme that guarantees drivers a gross income of between $6,888 and $11,888 -- before rental and fuel -- which is dependent on drivers completing 140 trips per week for a month.

The minimum qualifying benchmark for this programme is 50 trips per week which guarantees an income of $2,400, according to Grab.

“Based on our estimates, 180 trips per week equates to 25 daily trips, implying 12-14 hours of driving per day,” says DBS analyst Andy Sim in a Tuesday report.

As for ComfortDelgro, Sim says its taxi fleet has bottomed out and is showing initial signs of an increase. As of Sept, its taxi fleet stood at close to 12,700, up from 12,535 as of June.

In the upcoming 3Q18 results expected on Nov 9, Sim estimates CD to post a smaller net profit decline of 4-5% y-o-y compared to 20% and 6% in 1Q18 and 2Q18, respectively, largely on the back of drop in contribution from its taxi operations, mitigated partially by its public transport operations.

“With that, we believe CD should revert to report earnings growth in 4Q18F and FY19F, on the back of stabilised taxi operations, better contribution from its public transport operations, and recent acquisitions,” adds Sim.

DBS is maintaining its “buy” on CD with $2.59 target price.

Year to date, shares in CD are up 12.4% to $2.26 or 17.4 times TTM earnings.