ComfortDelGro - OCBC Investment 2021-02-16: Recovery Underway But Patience Needed


ComfortDelGro - Recovery Underway But Patience Needed

  • Continued sequential improvement.
  • S$169m of government reliefs in 2020.
  • ComfortDelGro in net cash position but management still cautious.

Sequential improvement in ComfortDelGro's financial performance

  • After a S$42.0m net loss in 2Q20, ComfortDelGro (SGX:C52)’s bottom-line continued to recover from S$21.7m net profit in 3Q20 to S$46.1m in 4Q20, bringing full year net profit to S$61.8m.
  • Recall that ComfortDelGro saw impairment of S$30.8m in 2Q20 and S$17.5m in 3Q20, mainly due to the taxi businesses in Singapore, Australia, the UK and Vietnam. This was offset by government relief due to COVID-19: S$82.3m in 2Q20, and about half of this figure in each of 3Q and 4Q.
  • Excluding government relief, ComfortDelGro's operating profit improved from a loss of S$131m in 2Q20 to break-even in 3Q20 and finally S$29.7m in 4Q20.

Taxi operations the main drag in 2020

  • The taxi segment was the main drag in 2020, with operating loss of S$64.4m, while public transport was the main contributor to earnings. ComfortDelGro’s taxi fleet stood at 9,444 taxis as at Dec 2020 (~60% are hybrids), which was ~12% lower compared to Dec 2019. Current utilization level was around 95%.

Beneficiary of easing movement restrictions, but patience needed

  • Although Singapore has made good progress since moving into Phase 3, full resumption of economic activities remains a distant prospect. In particular, work-from-home trends are likely to continue for many companies and management only expects a gradual recovery ahead in terms of ridership trends.
  • In the meantime, resurgence of COVID-19 in some of ComfortDelGro’s key markets have also delayed the recovery and the emergence of new strains of the virus could also potentially change the course of any future recovery.
  • Compared to a final dividend per share of 5.29 cents last year, ComfortDelGro declared a first and final dividend of 1.43 cents in 4Q20 (with no interim dividend). This is despite the group having a net cash position of S$190m as at 4Q20, which could be used for M&A opportunities in the future, though there could be no hurry to do so in the near future as management retains a cautious stance given the ongoing uncertainties.
  • See ComfortDelGro Share Price; ComfortDelGro Target Price; ComfortDelGro Analyst Reports; ComfortDelGro Dividend History; ComfortDelGro Announcements; ComfortDelGro Latest News.
  • We tweak our estimates and roll forward our valuations, such that our fair value estimate for ComfortDelGro slips slightly from S$2.00 to S$1.90.

OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2021-02-16
SGX Stock Analyst Report BUY MAINTAIN BUY 1.90 DOWN 2.00