Towards Financial Freedom
ComfortDelGro - Firm 2QFY13 Results
ComfortDelGro (CD) reported strong a 2Q13 PATMI of SGD69m, up 6% y-o-y. The 2Q13 earnings accounted for 26.3% of our full-year estimates, in line with our expectations. We maintain our BUY rating and SGD2.25 TP, based on DCF (WACC: 9.0%; TGR: 2.5%). CD remains our preferred pick within the land transport space for its 46% overseas operating profit exposure and attractive valuation.
- Bus, taxi segments help offset drop in rail profits. CD's 2Q13 EBIT grew 6% y-o-y to SGD113m while 2Q13 EBIT margin expanded by 0.4ppt y-o-y to 12.4%. The EBIT growth was mainly attributed to its taxi segments in Singapore (+6.4%), China (+11.2%) and Australia (+33.3%) and bus segments in Singapore (+94%), UK (+34.3%) and Australia (6.5%). However, this was partially offset by a 61% y-o-y drop in the rail segment due to start-up costs pertaining to the Downtown Line (DTL).
- Decent ridership growth in 2Q13. In 2Q13, the average daily bus ridership grew 3.0% while that for rail ridership rose 6.4%. Although ridership growth levels appear to be slowing down, we will be paying more attention to the development of a new public transport framework by the Government, which could involve government ownership of rail operating assets, as well as a possible cost-plus model for public buses to be put in place.
- Overseas pie continues to expand. 2Q13 overseas EBIT accounted for 46.8% of group EBIT, up from 44.8% in 2Q12. CD aims to grow its overseas profit contribution to 50%. We believe the company is heading in the right direction as the domestic land transport space remains somewhat saturated, while those overseas continue to command attractive EBIT margins of 14.9% vs Singapore's 10.3%.
Source: OSK
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