COMFORTDELGRO CORPORATION LTD (SGX:C52)
ComfortDelGro - Recovery Underway, Back To Net Cash
- ComfortDelGro (SGX:C52)'s 3Q20 PATMI below expectations due to lower-than-expected rail ridership and bus-service fees. 9M20 PATMI at 18% of our FY20e forecast.
- Revenue rebounded S$152mn q-o-q to S$816mn. Operating losses narrowed by S$118mn q-o-q. There is large operating leverage for Comfort as revenue rebounds. We expect a stronger recovery in the coming quarters.
- Net cash of S$115mn vs. net debt of S$115mn a year ago.
- Most restrictions on group gatherings in Singapore will be lifted only in 4Q20. Phase 3 easing should further increase transportation volumes. Upgrade ComfortDelGro from ACCUMULATE to BUY with earnings catalysts expected from this.
- ComfortDelGro is our preferred proxy for a recovery in the transportation sector.
The Positive
Heathy cash flows.
- ComfortDelGro's 3Q20 net cash from operations, excluding grants, was S$167mn (3Q19: S$162mn) and S$383mn for 9M20 (9M19: S$407mn). This returned the company to net cash of S$115.5mn from S$115.3mn net debt in 3Q19.
The Negative
Public transport softer than expected.
- Revenue improved 12% q-o-q to S$640.8mn. Rail ridership was only 55% of pre-Covid levels in January. Another drag was lower bus-service fees from fuel indexation as fuel prices remained depressed.
Outlook
- We are expecting further improvements in the coming quarters. Considerably larger group gatherings or events in Singapore will only be allowed in 4Q20. Phase 3 should further accelerate ridership in taxis and trains as more religious, social and work activities resume. An area of weakness will be U.K.’s second lockdown curtailing taxi and coach ridership.
Upgrade to BUY with higher Target Price of S$1.83, from S$1.65
- We lower ComfortDelGro's FY20e PATMI forecast by 50% but raise FY21e forecast by 16%. ComfortDelGro has large market shares in rail, taxi and bus services in Singapore.
- See ComfortDelGro Share Price; ComfortDelGro Target Price; ComfortDelGro Analyst Reports; ComfortDelGro Dividend History; ComfortDelGro Announcements; ComfortDelGro Latest News.
- ComfortDelGro is our preferred transport proxy as the lockdown eases in Singapore. Unlike air transport, passenger-volume rebounds are more immediate and pronounced with pricing more stable in a regulated industry.
Paul Chew
Phillip Securities Research
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https://www.stocksbnb.com/
2020-11-16
SGX Stock
Analyst Report
1.83
UP
1.650
