Fundamental Meets Technical. Maintain BUY

• ComfortDelGro's share price broke out of its consolidation at S$1.72. This indicates that the overall signal has shifted from neutral to bullish and a new upcycle is about to unfold to the next resistance at S$1.81, then S$1.99.
• From a fundamental perspective, vaccine rollout across key markets such as Singapore, Australia and UK are on track and the easing of work-from-home (WFH) measures should lift demand for domestic transport. As a result, ComfortDelGro (SGX:C52) is well poised to enjoy positive operating leverage as ridership normalizes.
• Potential revision of rail framework could lead to an additional 49% upside to our FY21E EPS forecast by S$0.043 to S$0.013.

Welcome Back!

• The government has allowed up to 75% of staff to return to the workplace at any one time from 5 Apr onwards. This is a jump from the current 50%. Concurrently, WFH is no longer the default, as workplaces are now permitted to adopt a more flexible way of working such as staggered start times.
• Meanwhile, caps on events are also easing from 24 Apr onwards. For instance, B2B events being piloted can have up to 250 attendees. Those with pre-event testing will be allowed to have up to 750 attendees, in zones of up to 50 attendees each.

Vaccine Rollout Gathers Pace

• ComfortDelGro’s key operating countries (Singapore, Australia and the UK) are on track/accelerating the pace of vaccinations.
  • Singapore has one of the highest local production of AstraZeneca vaccine by CSL.
• We expect subsequent easing of movement restrictions and WFH measures. This should lift domestic transport demand, which bodes well for ComfortDelGro.

Technicals Turning Bullish

• Our chartist Nik Ihsan Raja Abdullah has the overall trend has shifted from neutral to bullish.
• Concurrently, the bullish readings in RSI and DeTrend also suggest that a new upcycle is about to unfold.
• ComfortDelGro's share price techncal support at S$1.64, S$1.59.
• ComfortDelGro's share price technical resistance at S$1.81 then S$1.99.

Source: Maybank Kim Eng Research - 4 Apr 2021