Phillip Securities 2015-08-14: ComfortDelGro Corp Ltd - 2Q15; Meeting expectations. Maintain REDUCE.


Meeting expectations

  • 2Q FY15 revenue came in 4.9% lower than consensus expectations, while PATMI was 4.5% higher. 
  • 6M FY15 revenue and PATMI met 47.3% and 48.3% of consensus full year estimates respectively. 
  • 4 Cents interim dividend declared; 57.7% payout based on 6M FY15 EPS of 6.93 Cents. (3.75 Cents interim dividend in previous year; 57.4% payout based on 6M FY14 EPS of 6.53 Cents.) 

Analyst briefing key takeaways 

  • SBS Transit (SBST) has the capacity to retain bus captains. SBST is currently short of 200 bus captains; those who choose not to transfer to Tower Transit (winner of Bulim Bus Package tender) will be retained to support existing operations. (SBST is a 75%- owned subsidiary of CD.) 
  • Singapore Taxi fleet replacement is about 2,000 to 3,000 annually. Fleet expiry is evenly spread out and Taxi Capex is expected to continue going forward. 
  • CD intends to submit a bid to operate London Overground. CD is one of four pre- qualified entities that have been shortlisted to participate in the tender. This is not expected to have a material impact on FY15 and FY16 as the contract is to commence at the end of 2016. 
  • Competition from GrabTaxi and Uber. Management commented that while the impact from these two sources has been minimal, they are nonetheless exploring ways to mitigate it. 
  • Status of energy hedging for next year. Diesel for SG buses 26% hedged, diesel for sale to taxi hirers 35% hedged, electricity 20% hedged and diesel for UK buses 15% hedged. 

How do we view this 

  • The results were in line with consensus (mentioned above); and 6M FY15 revenue and PATMI meet 47.0% and 46.8% of our FY15e forecast respectively. 

Investment Actions 

  • We do not make any changes to our estimates and retain our DCF-backed valuation of S$2.97 (implied 20.0x FY15e forward P/E ratio). 
  • Maintain at "Reduce" in view of the absence of fresh positive catalysts.

Richard Leow CFTe | http://www.poems.com.sg/ Phillip Capital 2015-08-14
REDUCE Maintain REDUCE 2.97 Same 2.97