Category: ComfortDelgro
ComfortDelgro – BT
ComfortDelGro to push out taxi rebates early
It expects savings to total $4.6m or $306 per taxi per year
TAXI companies have decided to pass the Budget road tax rebates on to drivers – and one operator even plans do it four months early.
ComfortDelGro, the dominant player with about two-thirds of Singapore’s 24,000 taxis, yesterday said that it will pass the savings on to drivers from March – instead of July.
It also said that it will spread the cash rebates over a shorter period of six months.
One of the Budget measures announced on Jan 22 was a 30 per cent road tax rebate for taxis for one year from July 1, 2009. The move will save cab companies $7 million.
In addition, operators will be granted a waiver of the special tax on diesel-powered taxis that are not hired out between March 1, 2009 and Feb 28, 2010. The annual special tax for taxis is a flat $5,100 and is paid on top of road tax.
ComfortDelGro expects the savings from the rebates, which it will receive from the government over a 12-month period from July, to total about $4.6 million, or $306 per taxi per year.
But instead of giving drivers $25.50 a month over 12 months from July, ComfortDelGro will give them $51 a month cash over six months from March, to provide ‘faster relief during these difficult times’.
This is the second year that the company has passed all road tax savings on to its drivers. Last year, it passed $2.7 million of rebates on to them.
SMRT, the second-biggest player here, also said yesterday that it will pass the latest rebates on to its drivers in full. ‘We have yet to determine how this can be done. Details will be announced later,’ a spokeswoman said.
Unlike ComfortDelGro, SMRT’s taxi division has not been profitable for some time. In the third quarter ended Dec 31, 2008, it suffered an operating loss of $226,000 due to a lower average hired-out fleet.
At Premier Taxis, similar sentiments were echoed regarding the rebates. ‘Definitely, we will return them to drivers but we haven’t decided when and how to do it,’ said managing director Lim Chong Boo.
Transport – BT
Public transport stocks seen as beneficiaries
PUBLIC transport stocks are looking good as key beneficiaries of a slew of measures in the latest Budget.
The recessionary mood may also result in higher passenger numbers as people choose more affordable public transport over private transport, analysts say.
Yesterday, ComfortDelgro gained 11 cents or 7.9 per cent to $1.50 and SMRT edged up one cent or 0.6 per cent to $1.60. SBS Transit, the rail and bus arm of ComfortDelGro, rose five cents or 2.9 per cent to $1.78.
Transport-friendly measures in last week’s Budget include a 30 per cent road tax rebate and a one-year waiver of the diesel tax for unhired taxis.
In a report issued yesterday, CIMB-GK analyst Lawrence Lye keeps his ‘overweight’ rating on the public transport sector.
‘We continue to like the sector for its relative defensiveness amid a tough recession, given that people will need to move about in the most affordable way, supporting ridership,’ Mr Lye said. ‘The 40 per cent property tax rebate should also benefit SMRT, which has net lettable space of over 26,000 sq metres.’
According to Government estimates, the road tax rebate will save taxi companies about $7 million and the diesel tax waiver will provide savings of about $6 million. This will benefit taxi hirers facing flagging demand.
Both ComfortDelgro and SMRT are in discussions with the Public Transport Council (PTC) to cut bus and train fares by end-February.
Mr Lye said he is keeping an ‘outperform’ rating on ComfortDelgro and SMRT with respective target prices of $1.97 and $2.08. But he does not expect the benefits from the Budget incentives to be substantial after the savings are passed to commuters and taxi hirers.
Deutsche Bank and UOB KayHian are sticking with their ‘buy’ calls on SMRT, though they expect the benefits derived from the Budget to have a neutral impact on earnings.
‘Although the benefits of cost savings from the budget are likely to be passed on, firm ridership and falling oil prices provide resilience to earnings,’ said Deutsche Bank analyst James Tan. UOB KayHian cited strong cash earnings and stable yield of 6.1 per cent as key positives.
But some analysts are making ‘neutral’ calls on SMRT for the same reason – that any benefits from the Budget measures will likely be passed on rather than hoarded.
DMG & Partners Securities and Credit Suisse are maintaining their ‘neutral’ ratings on SMRT, while Citi has reiterated a ‘hold’ call on the stock.
JPMorgan maintains a ‘neutral’ rating on SMRT and reiterates its preference for ComfortDelgro with an ‘overweight’ rating.
ComfortDelgro enjoys cost pass-through mechanisms in its overseas earnings in the UK and Australia, where it derives over 40 per cent of its group earnings, and should suffer a negligible impact with no fare increase for 2010, the brokerage said.
ComfortDelgro – CIMB
Enlarging its China footprint
Acquisitions in China
Taxi company acquisition: CD announced that it has increased its 55%-owned subsidiary, Beijing Jin Jian Taxi Services Co. Ltd in China has acquired a 100% stake in Jia Run Taxi Co. Ltd, a taxi operator in Beijing which owns 342 taxi licences and vehicles. This will increased CD’s Beijing taxi fleet to 5,421 vehicles and total fleet in China to 13,000 vehicles. The purchase consideration is Rmb76m (S$16.2m), based on the net asset value of the company. The acquisition will be financed by bank borrowings.
Increased shareholding in Chongqing driving school. CD also increased its stake from 80% to 90% in Chongqing ComfortDelgro Driving Training Co. Ltd. This is Chongqing’s largest driver training school offering driving lessons for various classes of vehicles. It has a fleet of 110 vehicles catering to an annual student enrolment of about 10,000. The purchase consideration of the additional 10% stake is Rmb6.4m (S$1.36m), based on the net asset value of the company and will be funded internally. So far, CD has invested Rmb57.6m (S$12.3m) in this venture.
Comments
Positive investments. We see both investments as positive as we had earlier alluded to a growing number of reasonably-priced M&A opportunities amid an uncertain economic environment. While these investments are small by themselves, they are an incremental increase in terms of an expanding China footprint. In addition, both investments were based on the net asset values with no premium attached, which is by far, the cheapest investments made by CD in the last two years that saw soaring valuations.
Targeting 70% mix of overseas revenue. CD has set itself a target of 70% mix of overseas revenue within the next 5-7 years. Undeniably, there will likely be more M&A projects undertaken by CD as organic growth will only be able to contribute incrementally. As at 30 Sep 08, CD has net cash of S$82m and notwithstanding the current difficult credit situation, it is well positioned to gear up should large and attractive opportunities emerge.
ComfortDelgro – DBS
Taking comfort in our numbers
Story: Post 3Q08, we revisit our assumptions on ComfortDelGro arising from: (i) lower crude oil price; (ii) its A$149m acquisition of Kefford Group in Victoria, Australia (iii) changes to our forex assumptions (GBP and AUD, against SGD).
Point: Our revisions are as follows:
1. Crude oil price assumption lowered to US$60/bbl and US$70/bbl in 2009-10, from US$80/bbl. The net positive change is S$38.5m and S$21.8m.
2. Kefford Group acquisition. The A$149m acquisition was announced on 20 Nov. Our estimate of the net profit contribution to CDG is S$5.7m in FY09 and S$5.9m in FY10. We view this acquisition as positive and are in line with the Group’s strategy to achieve 70% revenue contribution from overseas by 2012. Its existing operational experience in Australia reduces operating risks for this venture, in our view.
3. Lower forex assumption. We revised our GBP and AUD (against SGD) down to S$2.30/GBP and S$0.98/AUD. These change our forecast by -S$41.5m and -S$45.5m for FY09F
and FY10F respectively.
The net impact is minimal on our FY09F earnings but our FY10F has been trimmed down by 8%, largely due to a smaller revision in oil price (to US$70/bbl vs US$60 for ‘09F).
Singapore bus/train ridership remain robust. Bus and train (NEL) ridership grew 4% and 16% y-o-y in Oct. YTD, ridership growth of 6% (bus) and 16% (train) is in line with our FY08F assumption.
Relevance: Despite the downturn, we believe the Group’s business will be relatively less affected given its exposure in the public transport. We also like CDG for its strong balance
sheet and healthy operating cashflow. Maintain Buy. Our TP is maintained at S$1.59, still pegged to 15x on FY09F.
ComfortDelgro – BT
ComfortDelGro buys Aussie bus company
It will pay A$149.2m for Kefford Group, fourth largest bus operator in Victoria
ComfortDelGro will pay A$149.2 million (S$143.6 million) for the fourth largest bus operator in Victoria, Australia as the group moves steadily towards its goal of becoming a ‘significant operator’ in the Australian bus sector
The land transport giant acquired the Kefford Group through its 51 per cent-owned subsidiary ComfortDelGro Cabcharge Pty Ltd (CDC) after a four-month closed tender that attracted Australian and international operators.
Kefford is one of the oldest bus operators in Victoria state. It has a 16 per cent market share with a fleet of 328 buses and six depots.
It operates 66 route services under long-term government contracts in four main regions under brands such as Westrans and Eastrans in Melbourne, Benders Busways Lines in Geelong and Davis Bus Services in Ballarat.
ComfortDelGro said as the largest provider of bus routes in Melbourne’s western suburbs, Kefford stands to benefit from the Victorian government’s announcement of a A$10.5 billion plan to improve the public transport system over 10 years.
‘Kefford gives us a firm foothold in Victoria and together with our operations in New South Wales we now have a strong presence in the two most populous cities in Australia – Sydney and Melbourne – and major regional areas in both states,’ said ComfortDelGro managing director and group CEO Kua Hong Pak.
In terms of material impact, ComfortDelGro’s group corporate communications officer Tammy Tan said: ‘Kefford is a profitable business and should be able to contribute to the group’s bottom line from the word go.’
The acquisition of Kefford, which is subject to regulatory approvals, will cement CDC’s position as the largest private bus operator in Australia with a fleet of 1,198 buses.
For the first nine months of 2008, ComfortDelGro’s turnover in Australia increased 25.7 per cent to $156.9 million.
In a sign that there could be more Australian purchases to come, Mr Kua said: ‘Our intentions are clear – we want to become a significant operator in the Australian bus sector.’
When asked whether ComfortDelGro would pick up the pace of its acquisitions because of the falling Australian dollar, Ms Tan replied: ‘Certainly the weaker Aussie dollar has worked to our benefit where this acquisition is concerned.’
But she emphasised that ComfortDelGro makes investments not just based on exchange rate movements.
‘Rather, we base them on the strength of the investment opportunities themselves,’ she said.
Overseas ventures now account for 42 per cent of group turnover, which for the third quarter ended Sept 30 was up 5.2 per cent to $803.5 million.
The group aims to derive 70 per cent of its turnover from overseas within the next five to seven years.