ComfortDelgro – UBS
• H110 net profit of S$113m in line with ests; 48% of UBS’ 2010E forecast
Q210 revenue grew S$31m YOY: Singapore taxis, buses and rail benefitted from strong domestic demand. Australian buses gained S$23m on more services and a
10% forex impact. CDG will pay interim DPS of S$0.027 (50% payout).
• H110 op profit from S’pore taxi and bus grew 8% YOY, and rail by 34%
CDG achieved 100% utilisation (fr 99% in Q1) on a slightly enlarged taxi fleet and the outlook for coming quarters appears positive based on CDG’s comments that they now have a waiting list from drivers for their taxis, a situation which we recall has not been observed since Sg’s taxi industry was liberalised in late 2003. Meanwhile, we expect ridership growth on the North East Line (+12% YOY) to remain high. The NEL is in an operating leverage sweet spot as ridership has already passed the breakeven point, but train carriages are not filled to capacity.
• Overseas operations: Australia growth offsets weak UK taxis
In A$ terms, Australia bus revenue grew 22% YOY due to a full quarter of profit from Melbourne. QOQ, profit grew on more routes operated in both Melbourne and Sydney. CDG expects upcoming growth from Australia to stay strong as more services have been secured. CDG’s high-teen Australian margins are buffered from rising cost pressure as contract terms allow for recovery of certain costs. CDG’s acquisition of Swan Taxis in Perth for A$39m, if successful, would boost 2011E net profit by about 1.5%.
• Valuation: Price target based on UBS VCAM
We use DCF and forecast long-term valuation drivers using UBS VCAM.