Company Update Singapore 22 July 2019 Transport | Road & Rail ComfortDelGro (CD SP) Neutral (Maintained) Positive On Long-Term Outlook Target Price (Return) SGD2.65 (-5%) Price: SGD2.(+xx%)80 Market Cap: USD4,462m Avg Daily Turnover (SGD/USD) 19.5m/14.4m Maintain NEUTRAL and DCF-based SGD2.65 TP, 5% downside. We Analyst remain confident of CD’s earnings growth, aided by contributions from recent acquisitions, and its public transport unit’s growth. Any reduction in Singapore Shekhar Jaiswal rail losses amidst higher transport fares or government grants received could +65 6232 3894 lift earnings and our TP. We leave our estimates unchanged as details have
[email protected] been sparse. We like the defensive nature of CD’s earnings. Still, the stock Share Performance (%) looks fairly priced – trading at 18.3x 2019F P/E (5-year average: 15 x). YTD 1m 3m 6m 12m Earnings sensitivity of public transport business revenue. Although the Absolute public transport business is expected to be the key driver of earnings growth 30.2 7.3 7.3 30.8 19.7 Relative during the forecast period, its growth has been dragged by loss making rail 20.2 4.5 6.4 26.1 16.6 business in Singapore. 52-wk Price low/high (SGD) 2.07 – 2.90 ComfortDelGro’s (CD) North East MRT line (NEL) is operating under the new ComfortDelGro (CD SP) Price close rail financing framework, which puts a cap on operating margin. And its 3.0 Downtown MRT line (DTL) has been incurring losses amidst lower-than- estimated ridership and fares.