SINGAPORE -- Traditional taxi companies are struggling in the age of ride-sharing but Singapore's largest cab group ComfortDelGro has managed to claw out of the slump through overseas acquisitions as its 2019 outlook brightens with government plans to tighten regulatory oversight of its new technology rivals.
ComfortDelGro, which controls 60% of Singapore's taxi market with 12,000 vehicles, on Feb. 13 logged a 40% increase in its net profit for the October to December quarter from a year ago at about 83 million Singapore dollars ($61 million). That marked its first year-on-year rise in seven quarters. The company's net profit for the 2018 full-year also increased 0.6% to SG$303 million.
The growth came mainly from new acquisitions, the company said. ComfortDelGro invested in 13 businesses overseas, worth SG$439 million, in 2018 alone -- mainly in bus businesses -- amid a difficult domestic situation.
The market is getting increasingly crowded after Indonesian ride-hailing company Go-Jek launched its services city-wide in January. This adds to competition from local rival Grab.
Nevertheless, ComfortDelGro shares have performed well so far this year. They were up 10.7% by Feb. 13, outperforming the benchmark Strait Times Index's 5.7% rise in the year to date.
ComfortDelGro can also take some comfort from potential changes in regulations. Singapore's Land Transport Authority said last month it was mulling a rule that would require ride-hailing operators to be licensed and that larger companies would be subject to tighter regulations, according to a public consultation document.
Such new rules could cost more for ride-sharing operators which are currently not subject to regulatory scrutiny. "The new framework would indirectly benefit ComfortDelGro, which has long operated in an industry that is regulated," analysts at CGS-CIMB pointed out in a recent report.
Ang Wei Neng, chief executive of ComfortDelGro's taxi unit, admitted during a results briefing that the number of its taxis dropped in December as some drivers shifted to Go-Jek. But he said the impact was "not significant."
Grab, which was founded in Malaysia, and America's Uber Technologies were pioneers in Singapore's ride-sharing economy, entering the market in 2013. Traditional taxis including ComfortDelGro suffered as the new technology companies gave drivers and customers huge incentives to use their services. Grab acquired Uber's local business March 2018.
ComfortDelGro Chairman Lim Jit Poh said on Feb. 13 that the market has stabilized and the company expects its taxi revenue this year to be on par with 2018.