ComfortDelGro Corp Ltd - Phillip Securities 2016-05-13: In line with expectations

ComfortDelGro Corp Ltd - Phillip Securities 2016-05-13: In line with expectations COMFORTDELGRO CORPORATION LTD C52.SI 

ComfortDelGro Corp Ltd - In line with expectations 

  • S$995.6mm revenue exceeded consensus expectations of S$927.0mn by 7.4%; but in line with our expectations of S$983.0mn 
  • S$73.4mn PATMI in line with consensus expectations of S$73.7mn; and in line with our expectations of S$74.1mn 
  • S$10.9mn negative foreign currency translation effect on revenue 

 Bus: Business as usual 

  • On the home-front, there was no update on the timing of the tender for the third bus package under the Government Contracting Model (GCM). 
  • Handover for the Bulim and Loyang bus packages are expected to be in June and September, respectively. 
  • Newly elected Mayor of London will be introducing a bus hopper-fare in September; no impact on ComfortDelGro's operations as Transport for London (TfL) retains revenue risk. 
  • No major changes to the Australia operations, as there are no contracts expiring. 

 Taxi: Growth could start moderating 

  • Management guided that taxi hire rate remains at 100% (save for the spares), but the queue for hirers has "dramatically shrunk" as drivers have gone over to the privatehire services. 
  • Taxi fleet stood at 17,024 and its expansion will be somewhat moderated going forward. 
  • Taxi drivers' benefits grew 9.9% yoy; this trend is likely to be maintained in order to retain hirers and entice new hirers. 

 Rail: Touch-and-go on breakeven for Downtown Line (DTL) 

  • Average daily ridership on DTL in 1Q16 grew by 205.7% yoy to 206k passenger trips, following the commencement of revenue service of DTL2. 
  • Ridership is not as high as Management hoped it to be, and DTL is loss-making. 
  • Management views that it is possible to breakeven in 3Q, but breakeven would still most likely come when the full line is open. 
  • Higher cost is expected in 3Q and 4Q, coming from the build-up of headcount in preparation for DTL3. 

Our View

  • Maintain "Accumulate" rating with unchanged target price of S$3.21 The results were in line with our estimates and hence we do not make any changes to our forecasts. 
  • The target price represents an implied 20.2x FY16e forward P/E multiple.

Richard Leow CFTe Phillip Securities | http://www.poems.com.sg/ 2016-05-13
Phillip Securities SGX Stock Analyst Report ACCUMULATE Maintain ACCUMULATE 3.21 Same 3.21