UOBKayhian on 13 Feb 2015
FY15F PE (x): 20.8
FY16F PE (x): 19.3
Earnings in line with expectations. ComfortDelgro’s (CD) 2014 net profit of S$283.5m
improved 7.7% yoy and was in line with our full-year forecast of S$282m. Growth was
broad-based across most key sectors. Core business segments have all improved with
bus, rail and taxi revenue growing 10.6%, 19.5% and 6.9% respectively yoy. Notably,
revenue from the rail segment improved markedly as average daily rail ridership and
average fare increased 18.3% and 3.2% respectively.
Looking forward to another good year. CD is likely to continue its stellar performance
going into 2015. First, rail and bus ridership has risen. Based on our estimates, 2014
daily average rail and bus ridership increased 18.3% and 5.2% yoy respectively. We
expect ridership growth to be supported by the government’s pro-population policies and
measures to discourage private vehicle ownership. Second, the Implementation of a
2.8% fare hike from Apr 15 is expected to alleviate operating cost pressure and improve
operating margins. Third, the ability to increase taxi market share in Singapore. CD was
the only taxi company which adheres to the Taxi Availability Framework and hence will
be the only group allowed to grow its taxi fleet by 2% in 2015.
Downgrade to HOLD with a DCF-based target price of S$3.31 (previously S$3.08).
While fundamentals remain promising, we note that much of the attractiveness has been
priced in after a 20% ytd rise. In addition, CD currently trades at 21x 2015F PE, which is
close to its +2SD of 23x.
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