ComfortDelGro - Emerging Sustainability Play
- ComfortDelGro (SGX:C52)'s FY21 PATMI jumps 114.0% y-o-y to S$130.1m.
- We are forecasting ComfortDelGro’s FY22F net profit to rise ~26% y-o-y as ComfortDelGro’s key segments see increased ridership and demand. ComfortDelGro’s key markets (The UK, Singapore, and Australia) are moving towards treating COVID-19 as endemic, underpinned by vaccines and COVID-19 pills. Indeed, mobility trends in Singapore have already begun to normalise, and early indications point to a wider reopening once the Omicron wave subsides.
- With Grab set to list via a SPAC in the US and GoTo possibly looking to IPO soon, ComfortDelGro’s private-hire competitors may be subject to increased scrutiny, which could reduce aggressive promotions and competition.
- ComfortDelGro has embarked on multiple initiatives to green its business segments. The Group has invested in green projects that include the provision of EV charging infrastructure and a greening of its bus and taxi fleet which could potentially pave the way for inclusion in ESG indices.
- Maintain BUY call on ComfortDelGro with lower SOTP-based target price of S$1.95. Our target price for ComfortDelGro is based on our target prices for SBS Transit (SGX:S61) and VICOM (SGX:WJP), and 6.5x FY22F EV/EBITDA for ComfortDelGro’s remaining businesses (including CDG Australia).
- Where we differ: Consensus earnings for FY22F vary widely. We expect sequential quarterly improvements in FY22F, led by recovery and pick-up of transit mobility.
- Fears of high energy cost valid, but could be mitigated to a large extent.
Above is the excerpt from report by DBS Group Research.
Clients of DBS may access the full report in PDF @ https://www.dbs.com/insightsdirect/.
Woon Bing Yong DBS Group Research | Paul Yong CFA DBS Research | https://www.dbs.com/insightsdirect/ 2022-03-03 2022-03-03
Read also DBS Research's most recent report:
2022-11-15 ComfortDelGro - Slower But Ride Continues On
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