ComfortDelgro – DB

Double digit growth in Feb10 rail ridership

ComfortDelgro’s Feb10 figures showed a strong growth in rail and a slower turnaround in bus ridership. Rail ridership rose by 11.8% YoY to 0.4m while bus ridership declined by 4.7% YoY to 2.3m.

On a YTD basis, rail ridership grew 10.3% YoY, above our forecast of 8.0% YoY in 2010. While bus ridership, came in below our forecast of 2.0% YoY, declined 0.8% YoY. We expect bus ridership to turnaround in the 2Q10 onwards, helped by the recovery in the economy and a low base.

Maintain buy on CD, but SMRT remains our top pick for the sector. TP of S$1.75 implies a PE of 14.8x for FY10E. Key risks are: 1) a sharp increase in diesel prices; 2) forex; 3 potential regulatory actions affecting both domestic and overseas ventures.

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