COMFORTDELGRO CORPORATION LTD (SGX:C52)
ComfortDelGro - A Greener Fleet To Enhance ESG Score
- Under our enhanced ESG 2.0 review, ComfortDelGro obtained a score of 80, well above the average of 50, due to good disclosures and strong commitment to sustainable mobility.
- Transition of its fleet to green vehicles should also lead to better fuel efficiency and lower greenhouse gas (GHG) emissions. Concurrently, ComfortDelGro is seeking to employ route optimisation and on-demand services to improve its operating leverage. This is coupled with gradual recovery in ridership across key markets.
- Maintain BUY recommendation on ComfortDelGro and DCF-based target price of S$1.75 (WACC: 8.3%, LTG: 1%).
Accelerating electrification of its fleet
- ComfortDelGro (SGX:C52) has accelerated its fleet electrification as battery technologies have matured and EV charging stations are more readily available.
- In 2021, ComfortDelGro significantly increased its fleet of eco-friendly vehicles with close to 70% being hybrid, electric or CNG taxis across ComfortDelGro’s Singapore (65%), Australia (73%) and China (71%) businesses. With every EV the group adds to its fleet, it produces 50% less GHG emissions compared to its internal combustion engine counterpart in its lifetime.
- ComfortDelGro expects to add up to 400 electric taxis on the roads by year-end with the aim of achieving 1,000 electric taxis on the roads by 2023.
Rail ridership improves, but taxi rebates extended
- Meanwhile, SBS Transit (SGX:S61)’s rail ridership continued to recover in Sep 2022 (+50% y-o-y, +2.5% m-o-m) for ComfortDelGro, returning to ~90% of pre-pandemic levels amid extensive re-opening of the economy.
- But slightly disappointing for investors is that the 15% rebate on daily taxi rental fee has been further extended until end-2022, even though ComfortDelGro raised its online taxi booking commission from 4% to 5%. In our view, the rebate helps to lower the fixed cost for its drivers to better compete against private-hire vehicles.
Expects ComfortDelGro's 3Q22 to show sequential improvement
- We estimate ComfortDelGro's 3Q22 underlying PATMI of about S$46m (+10% q-o-q) due to sequential improvement in its public transport operations. The latest upward revision of bus & train fares in Singapore by 4-5 cents (+2.9%) w.e.f 26 Dec should also help to partly mitigate higher energy prices.
- See
- Even taking into account to the recent exclusion from the STI and general market weakness, we think ComfortDelGro is grossly oversold on a fundamental basis.
- Key risk includes unfavourable FX translation due to the weaker AUD and GBP.
Eric Ong
Maybank Research
|
https://www.maybank-ke.com.sg/
2022-10-13
SGX Stock
Analyst Report
1.750
SAME
1.750
