ComfortDelGro Corp Ltd - Phillip Securities 2016-02-15: Full year in line and steady

ComfortDelGro Corp Ltd - Phillip Securities 2016-02-15: Full year in line and steady COMFORTDELGRO CORPORATION LTD C52.SI 

ComfortDelGro Corp Ltd - Full year in line and steady 

  • FY15 revenue of S$4.11bn in line with consensus expectations of S$4.20bn. 
  • FY15 PATMI of S$301.9mn in line with consensus expectations of S$304.1mn. 
  • Final dividend of 5.0 cents declared (vs. FY14: 4.5 cents). 
  • Total (interim + final) dividend of 9.00 cents and 64.1% payout (FY14: 8.25 cents, 62.2% payout). 

Analyst Briefing Key Takeaways 

 Bus: Ongoing negotiations with Regulator, expect a smooth transition to the Government Contracting Model (GCM). 

  • The transition is still on track for September 2016. Ongoing negations are centred on contract pricing and treatment of non-BSEP (Bus Service Enhancement Programme) buses. 
  • Singapore bus revenue is expected to be lower in FY16, due to the 1.9% fare reduction from 27 December 2015. 

 Taxi: No material impact felt from third-party apps. 

  • The Singapore taxi business remains healthy, generating higher rental income from replacement taxis (Hyundai Sonata fleet gradually being replaced by Hyundai i40). Fleet size has been maintained at 16,800 taxis, and un-hired rate for the year was 0.8% (about 100 taxis). The un-hired taxis allows a float of spare replacements, when other taxis are sent for servicing. 

 Rail: Downtown Line (DTL) expected to breakeven only after the full line is opened. 

  • Rail business made a full year profit of S$3.2mn, dragged down by a loss of S$2.2mn in 4Q15. This loss in 4Q15 was mainly due to start-up costs associated with Downtown Line Stage 2 (DTL2). 
  • Management does not expect the combined Downtown Line Stage 1 (DTL1) and DTL2 operations to breakeven by the end of 2016, and this is consistent with their expectations when CD had participated in the bid to operate the line. This is due to the progressive nature of the opening up of the rail line. 
  • Downtown Line Stage 3 (DTL3), which is tentatively scheduled to be opened around June 2017 will incur start-up costs in 2016. 

Investment Actions 

  • We upgrade to "accumulate" rating with higher target price of S$3.21 (previous S$3.08)
  • The target price represents an implied 20.2x FY16e forward P/E multiple.

Richard Leow CFTe Phillip Securities | http://www.poems.com.sg/ 2016-02-15
Phillip Securities SGX Stock Analyst Report ACCUMULATE Upgrade NEUTRAL 3.21 Up 3.08