ComfortDelgro – JPM

1Q FY10 results review

1Q FY10 net profit of S$54.3MM (+3.4% Y/Y) was in line with expectations with growth coming from (1) CDC Victoria; (2) CDC NSW; (3) Singapore taxi; (4) auto engrg; and (5) rail (NEL ridership +12% Y/Y).

Bus: improvement in Australia, weaker Singapore outlook: Segmental revenue/EBIT for bus rose 8.9%/3.7% helped mainly by positive translation effect of the stronger A$, higher mileage operated by CDC NSW and fullquarter contribution from CDC Victoria. Singapore bus operation was weaker (EBIT: -21% Y/Y) due to the temporary fare reduction since Apr-09 (expiring Jul-10). Management expects Singapore bus ridership to be negatively impacted by the progressive opening of the Circle Line.

Recovery in Singapore taxis: EBIT for Singapore taxi grew 22% on slightly larger operating fleet and higher volume of cashless transactions e.g. NETS, credit cards, Cabcharge. However, management does not expect to significantly increase its taxi fleet in the near term as it continues to monitor the sustainability of demand from the integrated resorts.

Downtown Line bid could see delay: The company is actively preparing for the DTL bid but expects the tender to take place end 2010/early 2011.

Fuel hedging: Management attributed the 3% Q/Q decline in fuel costs to its sound hedging strategy. Fuel costs for the rest of the year remain substantially unhedged as management sees lower prices ahead.

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