Thursday, 14 August 2014


Kim Eng on 14 Aug 2014

  • 2Q14 net income of SGD75.7m (+9.9% YoY) in line. Strong Singapore taxi, UK bus and rail performances.
  • Interim DPS raised 25% to 3.75 SGD cts, reflecting better profitability and payout.
  • 30% YTD rally priced in positives. Downgrade to HOLD from BUY with unchanged TP of SGD2.50 (18x FY15E P/E).
Strong 2Q in line
2Q14 net income of SGD75.7m (+9.9% YoY) met expectations. 1H14 net formed 50% of our FY14E forecast. Taxi operations in Singapore continued to benefit from ongoing fleet renewal. Its new i40s are commanding higher rental rates. Taxi bookings in Singapore do not seem to have been affected by the growing popularity of third-party apps, as volume rose 10% YoY. UK bus operations booked much better profits with the aid of its newly acquired Metroline West. Rail operations were also better as revenue generated by Downtown Line (DTL) of SGD4.5m buffered losses even as start-up costs stabilised. Interim DPS raised by 25% to 3.75 SGD cts (FY13 interim: 3.0 SGD cts), reflecting better profitability and a higher payout of 57.6%.

Upside from bus transition priced in
CDG’s strong results underscore its solid fundamentals. Singapore earnings should continue to improve on a better bus performance after transition, the phased opening of DTL and taxi fleet renewal. Overseas should be driven mainly by acquisitions.
However, we believe its 30% YTD rally has more than priced in this rosy outlook. Our TP is unchanged at SGD2.50, pegged to 18x FY15E P/E, 1SD above its 10-year mean. This is justified by positives from Singapore’s bus-model transition. Downgrade to HOLD from BUY.

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