ComfortDelGro - RHB Invest 2020-11-04: Near Term Headwinds In The UK; Stay BUY

COMFORTDELGRO CORPORATION LTD (SGX:C52) | SGinvestors.io COMFORTDELGRO CORPORATION LTD (SGX:C52)

ComfortDelGro - Near Term Headwinds In The UK; Stay BUY

  • ComfortDelGro's share price could see near-term weakness amid earnings headwinds from the announced lockdown in the UK. However, with strong control on COVID-19 and continued Government support from extensions to the Jobs Support Scheme (JSS) and Point-to-Point Support Package to early 2021, its public transport and taxi businesses in Singapore should see q-o-q improvements.
  • We remain confident of ComfortDelGro's profit recovery in 2021 and believe current valuations remain compelling. Reiterate BUY with S$1.70 target price, 23% upside and c.5% FY21F yield.



Renewed lockdown in the UK is near term negative.

  • ComfortDelGro (SGX:C52) offers scheduled bus, coach, taxi circuit and private hire services in the UK. In 2019, UK accounted for 22% of revenue and 10% of operating profit. Amid weak business conditions caused by COVID-19, UK business reported an operating loss of S$6m in 1H20.
  • With a second wave of COVID-19 spreading across the country, UK has been placed on national lockdown for four weeks. But, unlike the restrictions in spring, schools, colleges and universities can stay open. Nevertheless, this is expected to dent any expectations of earnings recovery in the UK for 2H20.


Recovery in Singapore should continue.



Remain optimistic of strong earnings recovery in 2021.

  • With the cautious approach that the Government has taken towards re-opening of the economy, we believe Singapore should be able to avoid the re-emergence of COVID-19. This should translate into an improvement in public transport ridership and stabilisation of Singapore taxi business during 2021.
  • On y-o-y basis, we expect ComfortDelGro’s overseas business to see some improvement as well in 2021. From a low base of 2020, we expect ComfortDelGro to report more than 150% earnings growth in 2021.

Compelling valuation.






Shekhar Jaiswal RHB Securities Research | https://www.rhbinvest.com.sg/ 2020-11-04
SGX Stock Analyst Report BUY MAINTAIN BUY 1.700 SAME 1.700



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