ComfortDelgro – Lim & Tan

• Comfort Delgro reported 1Q ’13 net profit of S$57.7 million, up 7.9% y-o-y, which was above market expectations.
  
• The Group’s taxi business contributed positively to its bottom-line especially in Singapore, due to higher rentals from replacement taxis, a larger operating fleet and an increase in cashless transactions.
  
• But its bus and rail business in Singapore saw growth in revenue being offset by higher wages.
  
• The weakness in Australian dollar, Sterling pound and Chinese Renminbi relative to the Singapore dollar also negated revenue performance from its overseas operations.
  
• Even as net capex for 1Q ’13 rose to S$101.4 million, versus S$86.9 million in the same period last year, its balance sheet remains healthy given its net cash position.
  
• Looking ahead, management guided for higher revenue contributions from its overall bus business (except for UK market), as well as increase in top-line for its Singapore rail and bus units. But they also citied that they could face rising cost pressures going forward.
  
• Overall, the transportation company posted a decent set of quarterly earnings results, despite the headwinds from escalating salary costs and translation (forex) loss from its overseas business amid a strong Singapore dollar.