ComfortDelGro started at 'hold' by Maybank with $2.45 target price; says acquisitions are key to re-rating

ComfortDelGro started at 'hold' by Maybank with $2.45 target price; says acquisitions are key to re-rating

By: 
Michelle Zhu
04/03/19, 11:08 am

SINGAPORE (Mar 4): Maybank Kim Eng is starting coverage on ComfortDelGro (CDG) at “hold” with a target price of $2.45.

This comes on expectations the group’s transport focus and global expansion, which will provide a decent shelter amid private taxi-hailing competition, has been priced into valuations of 17 times 2019E-20E P/E.

In an initiation report on Sunday, analyst Luis Hilado identifies the UK and Australia as markets which would be in line with CDG’s management plans to invest in companies that permit majority control overseas, preferably with rate structures like those under Singapore’s bus-contracting model (BCM) which would allow for immediate earnings accretion.

He estimates the management’s acquisition allowance of up to $1 billion will translate to a gearing of just 24% versus current net cash.

“With or without such acquisitions, we believe CDG can continue to support 75% dividend payouts and generate defensible yields. In the event there are no major acquisitions, we would not rule out the possibility of special cash dividends in the medium-term,” says Hilado.

While the analyst thinks competition from the group’s unlisted rivals Grab and Go-Jek is currently “not yet as fierce”, he says each 50bp reduction in CDG’s taxi EBIT margins could hurt Maybank’s 2019E core profit projections and target price by 1%.

The research house is already assuming a –5% CAGR for taxi EBIT over 2018-21E.

“Share support should come from continued forecast payouts of 75% for prospective 4.3%-4.5% yields. Irrational taxi competition remains a risk to our outlook while additional contributions from acquisitions could provide upside,” he notes.

As at 11.06am, shares in CDG are trading flat at $2.43 or 2 times FY19E book value.

UnUsUaL reports 32% higher FY19 earnings of $13.2 mil on improved revenue & margins

SINGAPORE (May 27): UnUsUaL Limited has reported $13.2 million in net profit for the FY19 ended March, representing a 32% increase from FY18 net profit of $10 million due to higher revenue and improved margins. Revenue for the full year rose 22.6% to $56.9 million compared to $46.4 million a year ago. The topline growth was mainly attributed to higher revenue contributions from the company’s Promotion and Others segments. In line with the higher revenue, gross profit grew by $5.1 million to $23 million for the full year, while operating expenses increased 16.6% to $6.9 million. G....
Read More >>

Bukit Sembawang sinks into the red with 4Q losses of $11.6 mil on one-off impairment, allowance

SINGAPORE (May 27): Bukit Sembawang Estates sank into the red with losses of $11.6 million for the 4Q18/19 ended March, compared to earnings of $22.0 million a year ago. This represented losses per share of 4.46 cents for 4Q18/19, compared to earnings per share of 8.48 cents in 4Q17/18. This was mainly attributable to a surge in other operating expenses to $22.0 million during the current quarter, from $1.5 million a year ago. The increase was mainly due to impairment loss of $9.7 million on property, plant and equipment relating to Fraser Residence Orchard, Singapore, and allowance o....
Read More >>

CapitaLand Mall Trust upgraded to 'buy' by UOB on Jurong Lake District plans, Funan launch

SINGAPORE (May 27): CapitaLand Mall Trust will benefit from the development of Jurong Lake District (JLD) as it has three retail malls located within Jurong Gateway, says UOB KayHian. See: CapitaLand Mall Trust declares 3.6% higher DPU of 2.88 cents on higher income IMM Building, JCube and Westgate, which in total accounts for 20% of CMT’s portfolio valuation, are located within Jurong Gateway and adjacent to Jurong East MRT station. Meanwhile, Funan, which is about 90% pre-committed for retail space and 98% pre-committed for office space, is scheduled to open next month. See als....
Read More >>