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

ComfortDelGro - Read-through From SBS Transit's 3Q22 Updates

  • ComfortDelGro (SGX:C52)’s 74%-owned subsidiary, SBS Transit (SGX:S61) announced 3Q22 results that were slightly below expectations with a slight dip in q-o-q net profit despite strong ridership recovery. Note that SBS Transit typically makes up ~20% of ComfortDelGro’s net profit.
  • See SBS Transit's announcement dated 11 Nov 2022. 3Q22 revenue grew to S$391m (+1% q-o-q, +17% y-o-y), driven by strong ridership recovery (to ~85% of pre-COVID levels), offset by lower bus service fees. While 3Q22 net profit of S$17m still grew +23% y-o-y despite the discontinuation of the Jobs Support Scheme wage subsidy by the government, it dipped 10% q-o-q due to labour shortages and higher electricity costs. We believe cost pressure for SBS Transit could persist in 2H22F – public rail fares will be raised effective 26 Dec, while public bus service fees should see indexation from wages and CPI on an annual basis.
  • We forecast ComfortDelGro to report 3Q22F net profit of S$43m (+3% q-o-q, +68% y-o-y). We expect a strong showing on a y-o-y basis given the low comparison base with ComfortDelGro’s operating geographies impacted by tight COVID restrictions relating to the surge of the Delta variant in 3Q21.
  • In the UK, Department of Transport extended its government funding to support vital bus services across England through Mar 2023. Other key drivers are discussed in our previous report ComfortDelGro - CGS-CIMB Research 2022-10-12: A Comfort Pick.
  • Reiterate ADD on ComfortDelGro’s attractive valuation ( >1 standard deviation below historical mean) and sustainable FCFF generation.
  • ComfortDelGro’s defensive business model and strong balance sheet have allowed it to outperform the MSCI Singapore Index over the past 5 periods of economic weakness over its 18 years of listing history. Our target price for ComfortDelGro is based on 15.9x FY23F P/E (5-year historical average).

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 | 2022-11-11
SGX Stock Analyst Report ADD MAINTAIN ADD 1.560 SAME 1.560

Read also CGS-CIMB's most recent report:
2022-08-10 SBS Transit - Steadily Improving

Relevant links:
SBS Transit Analyst Report,
SBS Transit Target Price,

SBS Transit Share Price History,
SBS Transit Announcements,
SBS Transit Dividends/ Corp Actions,
SBS Transit News Articles


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