SMRT/ComfortDelgro – DMG
Land Transport Sector: ComfortDelgro and SMRT to join STI
ComfortDelgro (BUY\S$1.32\Target S$1.78)
SMRT (NEUTRAL\S$1.61\Target S$1.65)
effect from 23 Mar 09, with the next review scheduled for 10 Sep 09.
The changes reinforce our OVERWEIGHT stance on the land transportation sector. Positives
include public transport ridership growth in 2009 (although at a slower pace than in 2008) and lower crude oil prices, which will reduce diesel and electricity costs. Within the sector, we prefer ComfortDelgro, which has better potential for long term growth through its overseas operations – 42% of ComfortDelgro’s 2008 revenue came from overseas. Australia (7% revenue share) and China (8% revenue share) are potential growth drivers for ComfortDelgro.