Category: ComfortDelgro
ComfortDelgro – DMG
Business as usual; earnings in-line
4Q09 results in-line with expectations. ComfortDelGro registered 4Q09 PATMI of S$54.1m, up 20.8% YoY (-2.7% QoQ). 2009 PATMI of S$219.5m (+9.7%) was 98.5% of our full year forecast of S$222.8m (consensus S$219.7m). 4Q09 revenue rose 3.4% YoY to S$794.3m despite negative translation effect of the weaker £ and A$. In tandem with the rise in revenue, operating profit rose 15.4% to S$83.0m as operating expense growth was capped at 2.2%. Not for the negative foreign currency translation effect, the increase in operating profit for FY09 would have been S$358.9m (+29.1%). Maintain BUY with a DCF-derived target price of S$1.78.
Has rail cannibalised bus ridership? In 2009, NEL rail ridership rose 5.9% to 0.37m (2008 growth: 15.4%). This is in contrast with the 1.3% fall in bus ridership. While management pointed out that the decline in bus ridership was due to poor economic conditions, we believe the overlapping of inter-town bus service routes with MRT lines will continue to draw more bus commuters towards rail, due to the relatively faster journey times. We expect the cannabilisation process to continue with rail ridership growing by a stronger 10% in 2010 underpinned by tourism growth. In contrast, we expect bus ridership to decline by 2%.
Key takeaways from analyst briefing. Management expects: 1) Singapore bus revenue to decline in 2010 (we believe this is in view of fare reduction and weaker ridership); 2) bus revenue from Australia to improve with additional services while bus business in China will grow with higher ridership; 3) taxi revenue growth in Singapore, China and Vietnam to remain unchanged in 2010; and 4) revenue from UK operations to continue to be impacted by currency translation losses.
At its mid range of its 13-17x trading band. A final dividend of 2.67¢ was declared on top of its interim dividend of 2.63¢ paid earlier (representing a payout ratio of 50%). ComfortDelGro trades at 14.5x FY10 P/E multiple, which is at its mid-range of 13-17x trading band. Our DCF-derived TP of S$1.78 has an implied P/E multiple of 16.5x.
ComfortDelgro
All the data are extracted from the results,
|
|
Q408 |
FY08 |
Q109 |
Q209 |
Q309 |
Q409 |
FY09 |
|
Revenue |
775.0 |
3,125.6 |
716.6 |
758.3 |
782.6 |
794.3 |
3,051.8 |
|
Operating Profit |
73.9 |
278.0 |
81.5 |
94.5 |
90.9 |
83.0 |
349.9 |
|
PBT |
72.9 |
300.3 |
78.9 |
90.3 |
86.5 |
78.4 |
334.1 |
|
Net Profit |
57.9 |
249.2 |
67.0 |
71.3 |
68.3 |
69.1 |
275.7 |
|
NPM |
7.47% |
7.97% |
9.35% |
9.40% |
8.73% |
8.70% |
9.03% |
|
Cash |
408.3 |
<- |
412.1 |
447.5 |
450.4 |
485.6 |
<- |
|
Loan – NCL |
78.2 |
<- |
191.6 |
414.8 |
424.1 |
466.4 |
<- |
|
Loan – CL |
143.1 |
<- |
122.8 |
153.1 |
139.7 |
130.4 |
<- |
|
NAV (ct) |
74.65 |
<- |
78.47 |
78.94 |
78.90 |
81.01 |
<- |
|
EPS (ct) |
2.13 |
9.59 |
2.52 |
2.74 |
2.67 |
2.59 |
10.52 |
|
DPS (ct) |
2.40 |
5.00 |
— |
2.63 |
— |
2.67 |
5.30 |
Notes :
- All figures in S$Mil unless otherwise stated
- FY is End-Dec
Land Transport – AmFraser
4Q09: Improved ridership momentum
• Total rail ridership grew 4% YoY in 2009, boosted by better 6% YoY growth in 4Q09. 4Q was the highest quarter in 2009, enjoying 177.2 million rides by commuters. In contrast, 3Q was the peak quarter – with 169.4 million rides – in 2008. In total, commuters took 676.8 million rail trips in 2009.
• MRT ridership fared a better 4% YoY growth in 2009 against 3% YoY growth in LRT ridership. LRT ridership accounts for an insignificant 4.9% of total ridership. Four MRT lines – North-South Line (NSL), East-West Line (EWL), North-East Line (NEL) and partially-opened Circle Line (CCL) enjoyed a combined 643.8 million trips by commuters. Three LRT lines – Bukit Pangjang, Sengkang and Ponggol – saw 33 million trips for the year.
• For 2009, ComfortDelGro’s (CD) rail ridership fared better than SMRT, despite reverse in 4Q09. Through 75.3%-owned Singapore Bus Service Transit (SBST), CD’s only MRT line (NEL) and two feeder LRT lines (Sengkang and Ponggol) to NEL, saw a combined 6% YoY growth to 135.6 million trips in 2009. LRT accounts for 12% of this. In 4Q09, CD’s rail ridership grew 5% YoY to 35.7 million.
• Pick up in momentum for 4Q09 at SMRT pulls rail ridership growth to 4% YoY for 2009. SMRT saw a combined 137.3 million rides on its three MRT lines in 4Q09, representing 6% YoY growth, higher than the 2-3% YoY growth in the earlier quarters.
• Overall, incremental benefits from new Circle Line has not flowed through in 2009. Despite opening of a new MRT line since May 2009, 4% YoY growth in rail ridership for 2009 was much lower than the 12% YoY growth for 2008. As only one out of five stages of CCL is in operation so far, and CCL is more of a connecting line (an orbital line) to improve travel times and convenience, we believe more incremental benefits will flow through in the longer term from luring more commuters to take public transport when later stages of CCL are progressively opened. At the same time, while a slower economy dampened rail rides to some extent in 2009, a continued growth (+0.3% YoY) in car population also had an impact.
• In public scheduled bus services, CD’s dominant bus operations continued to fare poorer than SMRT’s in 4Q09. Overall bus ridership fell 1% YoY in 2009 to 1,115.5 million trips. SBST saw an improved flat 4Q09 over year ago which helped bring its full year to a 2% YoY fall to 827.9 million rides. SMRT also saw an improved 1% YoY growth in 4Q09, which helped bring full calendar year to a flat performance over 2008.
• On balance, ridership numbers released till December 2009, bodes better for CD. While CD’s bus ridership for FY2009 is a fall from 2008, this came in 1% higher than our forecast. At the same time, CD’s rail ridership came in 0.4% below our FY2009 forecast. Singapore bus accounts for a larger 20% of CD’s revenues, while rail accounts for a smaller 4%.
• SMRT’s 3QFY10 (YE March) reported MRT ridership of 137.3 million is 1% lower than our estimate. But on upside, bus ridership totalling 71.7 million (Dec 2009 estimated) is 2% above what we had factored in. However, the net effect is on the downside as MRT operations contribute 54% to revenues while bus accounts for 22%.
• Preview: Modest cut to SMRT’s FY10 estimates possible – but would not likely have drastic impact on rating. SMRT reports 3QFY10 (March) results 27 January after trading hours. CD reports FY09 (Dec) on 10 February. We reckon minor adjustments on ridership revision per se, could represent a 2% downward bias to SMRT’s fFY10 (March) earnings.
• Positive note for SMRT, we will start to see maiden contributions from Shenzhen ZONA Transportation Group in 3QFY10. The acquisition of ZONA – its first overseas foray in public transport services – was completed on 30 October 2009. While early contributions is insignificant in the near-term, SMRT expects this to be material within five years.
• CD still presents 15% upside to fair value of S$1.89 – maintain BUY rating. SMRT has appreciated 9% on our buy rating since our last report on 2 November 2009. Our current rating pends our results review report.
ComfortDelgro – Phillip
3rd Quarter Results
ComfortDelGro Corp recently announced their third quarter results for the financial year 2009 (“3QFY09”). Group revenue declined 3.7% from $812.6m for 3Q08 to $782.6m for 3Q09. The decrease of $30.0m was due to a negative foreign currency translation effect of $24.4m and a decrease in revenue of $5.6m.
Group operating expenses declined $43.0m or 5.9%, from $734.7m for 3Q08 to $691.7m for 3Q09. This decrease of $43.0m was mainly due to a positive foreign currency translation effect of $21.9m and a decrease in operating expenses of $21.1m. The decrease in operating expenses was due mainly to lower cost of diesel for resale, lower fuel and electricity costs, lower payments to drivers for contract services and the Jobs Credit in Singapore offset by higher staff costs, increase in purchases of vehicles for sale and higher depreciation.
Group operating profit was 16.7% higher than that for 3Q08, increasing from $77.9m to $90.0m for 3Q09. Group profit attributable to Shareholders of the Company was $7.3m or 15.1% higher, increasing from $48.3m in 3Q08 to $55.6m in 3Q09.
Bus revenue segment. At Group level, the third quarter bus business declined by 0.6% to $400.9m as growth in bus operations in Australia and China was offset by declines in Singapore and the UK. For the Group’s Australian business, ComfortDelGro Cabcharge Pty Ltd saw revenue jump by 40.6% to $76.9m boosted by contributions from the new operations in Victoria.
The China operations in Shenyang continued to experience strong ridership growth resulting in bus revenue to grow 10.0% to $15.4m for 3Q09.
Revenue from scheduled bus services under SBS Transit fell by 9.6% to $136.3m for the quarter due to the temporary fare reduction, increase in the transfer rebate and a drop in ridership by 2.9%.
The bus business in UK was 6.3% lower at $158.3m due to the weakening Sterling Pound. If the impact of the foreign currency was removed, revenue would have actually increased by 5.9%.
Taxi revenue segment. At Group level, third quarter revenue for the taxi business fell by 4.0% to $229.8m compared to the same period last year as revenue increases in Singapore and China were more than offset by declines in the UK and Vietnam.
Singapore’s taxi business increased by 2.0% to $159.4m due mainly to a higher volume of cashless transactions and a larger operating fleet.
China’s taxi operations increased by 4.6% to $32.0m due to increases in fleet sizes. The recent acquisition of Beijing Jia Run Taxi Co. Ltd and increases in the number of taxi licenses in Jilin City, Nanjing, Nanning and Shanghai also helped boost revenue for the quarter.
The UK’s taxi business fell by 26.5% to $36.9m due to a decline in corporate bookings and the negative translation effect of the weaker Sterling Pound. In Vietnam, revenue from the taxi business fell by 31.8% to $1.5m due to a drop in operating fleet.
Rail revenue segment. The rail operations saw a rise in revenue by 0.7% to $27.4m due to continued ridership growth. Average daily ridership for the North East Line grew by 3.9% to 328,000 while the Punggol and Sengkang LRTs increased by 3.1% to 47,000.
Bus Station revenue segment. Revenue from the bus station business under Guangzhou Xin Tian Wei increased by 3.9% to $5.3m due to an increase in the number of bus trips operated.
Vehicle Inspection and Testing revenue segment. Vehicle inspecting and testing operations increased by 0.5% to $19.9m due mainly to growth in the non-vehicle testing business under Setsco Services Pte Ltd.
Upgrade to BUY with an adjusted fair value estimate of S$1.78. Given the lower fuel & electricity costs as well as the decline in the cost of materials and consumables, we have adjusted our operating expenses downwards, leading to a stronger operating profit for our forecasted figures, arriving at an increased fair value of S$1.78. As this represents an upside potential of 16.3% from the last done price of
$1.53, we are upgrading to a BUY based on our stock selection system.