*Official* MasterLeong Thread - Part 2

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Divvy_newbie said:
shop apa.. 😂 CdG?
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The Call
ComfortDelGro on the road to a stable 2017
By Michelle Zhu / theedgemarkets.com.sg | January 16, 2017 : 9:34 AM MYT
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SINGAPORE (Jan 16): CIMB Securities continues to rate land transport company ComfortDelGro at “add” with an unchanged target price of $2.91, while forecasting a FY16-18 yield of 3.9-4.7% based on an incremental payout ratio of 66-70%.

In a note last Thursday, analysts Roy Chen and William Tng say they expect a stable outlook for the stock in the year ahead due to its well-diversified business profile. Factors underpinning this view include:

Government Contracting Model (GCM) benefits
Following the implementation of the GCM, Chen and Tng project a higher EBIT margin of 7% for Singapore’s bus segment under the model, as compared to the 1.6-3% margin under the previous one. They estimate that this will lead to a 54% y-o-y gain in the group’s bus EBIT to $53 million in FY17 from $35 million in FY16.

Improved Downtown Line (DTL) profitability
The DTL has always been loss-making since the commencement of preparation works in 2012, note the analysts. With stage III of operations due for completion in September this year, they expect a turnaround to finally be achieved in 2H17, and the group’s overall rail EBIT to reach $12 million – a 100% y-o-y gain over FY16’s $6 million. Factoring projected full-year contributions from DTL stage III, group rail EBIT is forecast to grow by another 58% to $19 million in FY18.

Overseas bus business contributions
Lower revenue and EBIT may result from ComfortDelGro’s overseas bus revenue due to a weakened pound, but the analysts are remaining optimistic that the business will still see low-single-digit net profit growth in FY17. This is due to an expected positive financial impact from the group’s recent acquisition of an additional 49% stake in ComfortDelGro Cabcharge (CDC) in Australia, provided that the deal is completed in 1Q17.

Manageable competition
Given ComfortDelGro’s active taxi fleet management, CIMB expects the group to maintain a low taxi idling rate in FY17 and keep taxi revenue and operating profit at the FY16 level. It also expects competition pressure from ride-hailing app companies such as Uber and Grab to be manageable as the group continues to maintain its position as Singapore’s taxi market leader.

Shares of ComfortDelGro are trading 2 cents lower at $2.52.
 
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