ComfortDelGro’s (CDG) FY14 results were broadly in-line with expectations as PATMI grew 7.7% YoY to S$283.5m on the back of an 8.1% increase in revenue to S$4.1b. As expected, YoY revenue growth was mainly driven by CDG’s Bus (+10.4%), Rail (+19.5%) and Taxi (+7.2%) segments. Operating expenses grew 8.7% YoY to S$3.6b mainly due to rising staff costs (+11.7%), higher contract services (+10.0%) and higher fuel and electricity costs (+14.8%). Consequently, CDG’s FY14 PATMI is largely within expectations as it formed 98.5% of consensus and our forecasts. We believe CDG will continue to see strong growth as management guided for revenue from bus, rail and Singapore taxi segments to increase going forward. CDG has been our top pick since Dec-14 with a BUY rating, which had been spot on thus far. While we still like CDG for its diversified revenue base and growth prospects, we think the recent bullish run in its share price is overdone. Hence, given its outlook, we increase our DDM-derived FV from S$3.03 to S$3.07. Downgrade to HOLD on valuation grounds.
FY14 earnings largely in-line with expectations
ComfortDelGro’s (CDG) FY14 results were broadly in-line with expectations as PATMI grew 7.7% YoY to S$283.5m on the back of an 8.1% increase in revenue to S$4.1b. As expected, YoY revenue growth was mainly driven by CDG’s Bus (+10.4%), Rail (+19.5%) and Taxi (+7.2%) segments. Operating expenses grew 8.7% YoY to S$3.6b mainly due to rising staff costs (+11.7%), higher contract services (+10.0%) and higher fuel and electricity costs (+14.8%). Consequently, CDG’s FY14 PATMI is largely within expectations as it formed 98.5% of consensus and our forecasts. FY14 revenue from overseas grew 0.3ppt YoY to form 40.8% of group’s total revenue while operating profit declined 0.3ppt to form 48.6% of group’s total operating profit.
Growth in key business segments still relatively strong
We believe CDG will continue to see strong growth as management guided for revenue from bus, rail and Singapore taxi segments to increase going forward. Bus segment growth is driven by: 1) ridership increase and the 2.1% net fare increase from Apr-15 (after contribution to public transport fund) in Singapore, 2) full-year contribution from Australia’s Blue Mountains Bus Company acquired in Aug-14, and 3) contract enhancements in UK. Similarly, Singapore rail business is expected to be higher from higher ridership and the same fare increase. Singapore taxi business is expected to grow with more cashless transactions and replacement of taxis in 2015. For longer-term growth, with the current core bus operations still in loss position, we believe the new bus contracting model commencing in 2H16 will turn core bus operations positive. Also, we expect contributions from DTL 2 (12 stations) and DTL 3 (16 stations) to come in with revenue services expected to commence as scheduled from 1Q2016 and 2017 onwards, respectively.
Top-pick since Dec-14; downgrade to HOLD on valuation grounds
CDG has been our top pick since Dec-14 with a BUY rating, which had been spot on thus far. While we still like CDG for its diversified revenue base and growth prospects, we think the recent bullish run in its share price is overdone. Hence, given its outlook, we increase our DDM-derived FV from S$3.03 to S$3.07. Downgrade to HOLD on valuation grounds
ComfortDelGro’s (CDG) FY14 results were broadly in-line with expectations as PATMI grew 7.7% YoY to S$283.5m on the back of an 8.1% increase in revenue to S$4.1b. As expected, YoY revenue growth was mainly driven by CDG’s Bus (+10.4%), Rail (+19.5%) and Taxi (+7.2%) segments. Operating expenses grew 8.7% YoY to S$3.6b mainly due to rising staff costs (+11.7%), higher contract services (+10.0%) and higher fuel and electricity costs (+14.8%). Consequently, CDG’s FY14 PATMI is largely within expectations as it formed 98.5% of consensus and our forecasts. FY14 revenue from overseas grew 0.3ppt YoY to form 40.8% of group’s total revenue while operating profit declined 0.3ppt to form 48.6% of group’s total operating profit.
Growth in key business segments still relatively strong
We believe CDG will continue to see strong growth as management guided for revenue from bus, rail and Singapore taxi segments to increase going forward. Bus segment growth is driven by: 1) ridership increase and the 2.1% net fare increase from Apr-15 (after contribution to public transport fund) in Singapore, 2) full-year contribution from Australia’s Blue Mountains Bus Company acquired in Aug-14, and 3) contract enhancements in UK. Similarly, Singapore rail business is expected to be higher from higher ridership and the same fare increase. Singapore taxi business is expected to grow with more cashless transactions and replacement of taxis in 2015. For longer-term growth, with the current core bus operations still in loss position, we believe the new bus contracting model commencing in 2H16 will turn core bus operations positive. Also, we expect contributions from DTL 2 (12 stations) and DTL 3 (16 stations) to come in with revenue services expected to commence as scheduled from 1Q2016 and 2017 onwards, respectively.
Top-pick since Dec-14; downgrade to HOLD on valuation grounds
CDG has been our top pick since Dec-14 with a BUY rating, which had been spot on thus far. While we still like CDG for its diversified revenue base and growth prospects, we think the recent bullish run in its share price is overdone. Hence, given its outlook, we increase our DDM-derived FV from S$3.03 to S$3.07. Downgrade to HOLD on valuation grounds
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