ComfortDelGro - UOB Kay Hian 2022-03-01: FY21 Building Up Immunity To COVID-19


ComfortDelGro - FY21 Building Up Immunity To COVID-19

  • ComfortDelGro reported strong 2021 PATMI of S$130.1m (+114.0% y-o-y), marking the start of its recovery from COVID-19. Public transport services continued its gradual recovery while the taxi segment returned to profitability.
  • Government relief is expected to taper off completely by 2H22 as key markets transition to endemic living. Trading at -1.5 standard deviation to its 5-year mean P/E, ComfortDelGro is an attractive value play, backed by strong fundamentals.

Worst of COVID-19 is over.

  • ComfortDelGro (SGX:C52) reported 2021 revenue and PATMI of S$3,538.3m (+9.1% y-o-y) and S$130.1m (+114.0% y-o-y), forming 101.4% and 86.4% of our full-year forecasts respectively. Excluding one-off S$15.8m net loss adjustment and S$9.0m in impairments, ComfortDelGro's PATMI would have met our full-year forecasts and be in line with expectations.
  • A final dividend of S$0.021 cents was declared, taking ComfortDelGro's 2021 total dividend to S$0.042 (2020: S$0.0143), with a full-year payout ratio of 70%.

Aided by COVID-19 relief.

  • 2021 operating profit increased 72.6% y-o-y as ComfortDelGro’s operating segments started to recover, led by both the public transport and taxi segments. Excluding 2021 government relief of S$84.6m (S$169.3m in 2020) and non-recurring items, 2021 operating profit skyrocketed to S$149.1m from S$11.9m in 2020.
  • Management noted that excluding UK government relief that would start tapering off from Jun 22, ComfortDelGro would not be receiving any material government relief from 2022 onwards.

Public Transport: Increased ridership and higher oil prices.

  • Annual public transport revenue (+9.3% y-o-y) and operating profit (+5.3% y-o-y) grew in 2021, contributed by increased 2022 public transport segment revenue to grow 4.5% y-o-y and operating profit to grow 35.4% y-o-y.

Taxi: Back to profitability as taxi rebates taper off.

  • 2021 annual taxi revenue and operating profit rebounded to S$426.1m (+5.7% y-o-y) and S$18.5m (-S$64.4m loss in 2020) respectively, backed IPO.
  • We expect greater margin expansion as COVID-19 taxi rental rebates have tapered off at end-Jan 22. Roughly S$107m of taxi rental rebates were given in 2021 as compared with S$119m in 2020. Management noted that net hiring has increased for taxi drivers as demand for taxi rides increases. Also, there are no plans to increase rentals rates in 1H22.
  • We expect 2022 revenue and operating profit from the taxi segment to grow 15.0% and 270.7% y-o-y respectively.

Taxi fare hike incoming.

  • From 1 Mar 22, taxi fares in Singapore would be adjusted higher to help taxi drivers offset inflation and rising fuel prices, with the last fare adjustment in Dec 11. A typical 10km seasonally off-peak normal trip would cost 7.7% more post-hike. As ComfortDelGro earns over 95% of taxi revenue from rentals, we reckon that this would not directly affect ComfortDelGro’s taxi revenue.
  • However, ComfortDelGro might indirectly benefit as more new and existing taxi drivers would continue driving, given the possibility of higher personal income. This would be positive for ComfortDelGro as the increasing taxi demand from the removal of WFH measures and higher fares would entice more taxi drivers to continue driving, thus helping support taxi rental revenue.

ComfortDelGro - Earnings forecast revision & recommendation

Llelleythan Tan UOB Kay Hian Research | https://research.uobkayhian.com/ 2022-03-01
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