ComfortDelgro – OCBC

Decent start to the year

  • Group did well in 1Q13
  • Fuel savings for FY13
  • Still hopeful for fare increase

1Q13 results show YoY improvement

ComfortDelGro’s 1Q13 results saw revenue increasing slightly by 1.8% YoY to S$870.8m on the back of broad–based growth across its segments while operating profit improved 2.8% to S$95.9m as higher staff (+5.1% to S$276.5m) and repairs and maintenance expenses (+1.7% to S$42.9m) were offset by a reduction in fuel and electricity expenditure (-9.7% to S$64.9m). As a result, PATMI rose 7.9% to S$57.7m.

Group to benefit from lower fuel costs

The group has benefited from proactive fuel hedges put in place during the lull in fuel prices, and this has helped to mitigate cost pressures in other areas (i.e. increase in hiring related to the Downtown Line) as well as take the sting out of sustained weakness in its SG core bus operations, which saw a wider operating loss of S$5.4m (1Q12: -S$3.7m). With 60-70% of its diesel and 70% of its electricity requirements hedged for FY13, we expect this trend to continue in the coming quarters.

No word on possible fare increase but other catalysts remain

We had previously expected the fare review committee to announce a fare increase by the middle of 2Q13. With that time-frame now unrealistic, we temper our projections for ComfortDelgro’s Singapore operations for the remainder of FY13 but still expect to see an implementation this year. Nonetheless, the group’s other segments (i.e. Viacom, taxi etc) and overseas ventures remain attractive. For instance, it is in the tendering process for additional bus routes in NSW, Australia, and if successful, will benefit the group beyond FY13.

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