ComfortDelgro – DBS

A reasonable start

• 1Q09 results within expectations
• Revenues lower (-4%) on weaker GBP, AUD
• Operating profits up (+7%) on lower staff, fuel costs
• Maintain Buy, TP unchanged at $1.55

1Q09 within expectations. Headline net profit of $52.5m (+4.6% y-o-y) was within expectations. Revenue dipped by 4% y-o-y to $716.6m on negative translation effect of a weaker GBP and AUD ($50.1m). Otherwise, revenue would have been up by 2.3% to $766.7m. As a result of lower operating expenses, operating profit increased by 7% to $81.5m.

Weaker currency; lower fuel and staff costs. Singapore bus operations remained relatively stable despite the downturn. Although bus ridership dipped slightly by 0.3%, revenue remained relatively flat on contribution from advertising revenue. Singapore Bus operating profit grew to $16m (+15% yoy) largely on lower fuel costs. Rail revenue ($29.9m, +12% yoy) continued to grow on higher ridership. Taxi revenues were affected by contributions from UK ($38m, -34% yoy) due to lower corporate bookings and a weak GBP. Taxi division’s operating profit dipped by 11% y-o-y to $24.3m on higher insurance premiums, accident claims and drivers’ benefit.

Maintain Buy, TP: S$1.55. We believe the Group will continue to maintain its stable growth in the current downturn, save for a spike in oil price we see in 2008. The recent strength in AUD against SGD should bode well for the Group. Maintain Buy, with our target price maintained at S$1.55, pegged at 15x FY09F PER (midtrading range).

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