COMFORTDELGRO CORPORATION LTD
C52.SI
ComfortDelGro: 1H15 broadly within expectations
Stable 2Q15 results Stability on diversified revenue base
No surprises; maintain HOLD
Steady 2Q15 performance
- ComfortDelGro (CDG) continued its steady growth in 2Q15 as PATMI increased 6.9% YoY to S$80.9m on the back of a 2.1% growth in revenue to S$1.04b, driven mainly by Bus (+4.1%), Rail (+6.8%) and Taxi (+3.3%) segments, but partially eroded by weaker AUD and GBP against SGD.
- 2Q15 operating expenses rose 2.2% YoY to S$916.3m mainly from higher staff costs (+3.1%), depreciation (+9.2%) and contract services costs (+7.2%) but offset by lower fuel and electricity costs (-10.2%) and lower materials and consumables (-8.9%).
- Consequently, 1H15 results were within expectations as revenue grew 1.7% YoY to S$2.0b, while PATMI rose 6.8% to S$148.5m and formed 48.4% of our FY15 forecast. The proportion of overseas contributions declined YoY, likely due to weaker currencies.
Stable growth from diversified revenue base to sustain
- Looking ahead, we continue to expect CDG to record stable growth with diversified revenue base as management guided for revenue from CDG’s bus, rail and taxi segments to increase.
- Bus segment growth continues to be driven by:
- higher ridership and fares in Singapore,
- new routes and service enhancements in UK to offset weaker GBP,
- contribution from Blue Mountains bus services in Australia to offset weaker AUD.
- We also note for Singapore bus segment, this operation will turn sustainably profitable on stable margins post transition to the new bus government contracting framework from 2H16 onwards.
- For the rail segment, growth is likely to come from higher ridership due to:
- more new trains to be added to the North-east Line (NEL) in FY15, and
- Downtown Line Phase 2 (DTL2) is on track to open by Dec 15 and is likely to contribute significantly.
- For taxi, we expect fleet expansion and renewal of taxi fleet in Singapore to drive taxi revenue growth through higher rental income.
Strong balance sheet; maintain HOLD
- Stability is a key characteristic of CDG and we like its diversified revenue base and strong balance sheet.
- With an in-line set of 1H15 results, we keep our forecasts unchanged. Maintain HOLD with the same FV of S$3.07.
Eugene Chua | http://www.ocbcresearch.com/ OCBC Investment Research 2015-08-14
3.07
Same
3.07
