UOBKayhian on 3 Nov 2014
FY14F PE (x): 24.2
FY15F PE (x): 18.8
Continuing the good work in 2QFY15. 1HFY15 net profit of 47.6m (+55% yoy) was
ahead of our estimate owing to a sharp rise in operating margin to 10.2% (1HFY14:
7.3%) on solid cost control. The fare segment (bus and rail) registered a 4% yoy rise in
turnover, boosted by higher ridership (2.3% yoy for trains and 5.2% yoy for bus) and
higher fares. An interim dividend of 1.5 cents was declared (1HFY14: 1.0 cents).
HOLD with a DCF-based target price of $1.56 (WACC: 7.9%, terminal growth: 3.0%).
SMRT looks fairly valued after rising 29% ytd. A possible entry level would be S$1.40.
We continue to prefer ComfortDelGro for its overseas growth potential, diversification
and cheaper valuation. In addition, ComfortDelGro’s FY14 PE of 20.0x is more
attractive compared to SMRT’s FY15 PE of 24.2x.
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