ComfortDelGro 3Q22 - CGS-CIMB Research 2022-11-14: Inflationary Pain Offsets Ridership Recovery

ComfortDelGro 3Q22 - Inflationary Pain Offsets Ridership Recovery

  • ComfortDelGro (SGX:C52) posted 3Q22 PATMI of S$34m (-18% q-o-q, +33% y-o-y), with stronger sequential performance in the taxi segment more than offset by weakness in the public transport segment. 9M22 core net profit came in at S$121m, below expectations at 67%/62% of our/Bloomberg consensus forecasts. See ComfortDelGro's Announcement dated 14 Nov 2022.
  • Excluding government grants and exceptional items, ComfortDelGro's 3Q22 core EBIT came in at S$54m (-14% q-o-q, +170% y-o-y). Despite strong ridership recovery, cost pressures from driver shortages and heightened inflation hurt margins.
    • Taxi segment saw EBIT recover strongly to S$16m in 3Q22F (2Q22: S$10m; 3Q21: S$6m loss), helped by lower rental reliefs given in Singapore and China.
      • Job bookings through CDG app in Singapore rose 50% y-o-y to ~9m in 3Q22. ComfortDelGro believes current strong demand for point-to-point transport and healthy competitive landscape provide it with a good opportunity to further raise monetisation of its app platform, either through commission rate increase or implementation of platform fees.
    • Public transport segment core EBIT (excluding government grants) came in at S$23m (-42% q-o-q, +48% y-o-y). While we have flagged potential inflationary pain in our earlier report: ComfortDelGro - CGS-CIMB Research 2022-11-11: Read-through From SBS Transit's 3Q22 Updates, cost impact came in wider than expected.
      • Driver shortages led to ComfortDelGro having to pay more for overtime spend and higher-fee agency workers. While ComfortDelGro’s public bus service fees (government contracts) are indexed monthly for fuel changes, indexation for wages and general CPI are only carried out on an annual basis.
      • ComfortDelGro is trying to contain costs and actively engage with regulators on wage negotiations, but we believe margin pressure could persist in 2H22F and will only see some relief in early-FY23F.
  • We lower our FY22-24F EPS forecast for ComfortDelGro by 11.7%-16.3% on lower margin assumptions. With macro hurts (FX, inflation) likely to persist while pace of topline recovery slows as we approach a “new normal” in land transport ridership, we see risks to near-term earnings and downgrade ComfortDelGro from Add to HOLD.
  • Our target price for ComfortDelGro is lowered to S$1.30, based on a lower 13.8x FY24F P/E (-1.5 standard deviation below ComfortDelGro’s 5-year historical average) as we roll over our valuation base year.

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @

ONG Khang Chuen CFA CGS-CIMB Research | 2022-11-14
SGX Stock Analyst Report HOLD DOWNGRADE ADD 1.30 DOWN 1.560

Previous report by CGS-CIMB:
2022-11-11 ComfortDelGro - Read-through From SBS Transit's 3Q22 Updates

Target prices by 4 other brokers at ComfortDelGro Target Prices.
Listing of broker reports at ComfortDelGro Analyst Report.

Relevant links:
ComfortDelGro Share Price History,
ComfortDelGro Announcements,
ComfortDelGro Dividends & Corp Actions,
ComfortDelGro News Articles


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