ComfortDelgro – CS

1Q10 in line – Singapore taxis and Australian buses drive growth

● CD’s March-quarter revenue of S$766.9 mn (+7% YoY) and net profit of S$54.3 mn (+3% YoY) were in line with our forecasts, and 24% and 23% of our full-year revenue and earnings estimates, respectively.

● In Singapore, operations were buoyed by bus and rail ridership growth of 0.9% and 12.1%, respectively. Taxi revenue rose 8% YoY, driven by a larger operating fleet (up 1.5% YoY) and higher cashless transaction volumes, reflecting firm underlying demand.

● CD’s overseas growth profile, now at 43% of revenue and 38% of operating profit, remains on track, led primarily by an 84% YoY jump in its Australian bus operations (full-year contribution from CDC Victoria and tailwinds from a stronger AUD). UK bus revenue was flat, as increased standards lowered QIC income at Metroline.

● We see CD as the best leveraged to rising visitor arrivals, with its dominant taxi market share. We fine tune our EPS by 1% and raise our target price slightly to S$1.90 from S$1.88, and believe that valuations are compelling at 13x P/E. We maintain our OUTPERFORM rating.

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