ComfortDelGro - Maybank Research 2023-05-16: A Smoother Ride; Slow Start But Bright Spots Ahead

• As expected, ComfortDelGro (SGX:C52)'s 1Q23 PATMI of S$32.8m (+28.6% q-o-q; -56.9% y-o-y due to one-off gain of S$37.2m on disposal of Alperton property in London a year ago) was soft, forming just 22%/19% of MIBG/Bloomberg consensus full-year estimates.
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• We keep our FY23-25E EPS intact and our DCF-based target price of S$1.45 for ComfortDelGro (WACC: 8.3%, LTG: 1%).

Recovery underway for overseas operations

• 1Q23 revenue for Public Transport Services grew marginally by 1.5% y-o-y to S$714.3m in tandem with improved rail ridership and fare increase from 26 Dec 2022. This was offset by contract renewals in Australia at slimmer margins, and lower Singapore Bus margins on five bus packages as part of its Downtown Line (DTL) settlement.
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Lower taxi rental rebates to show in 2Q

• Taxi revenue rose by 2.9% y-o-y to S$109.4m with the introduction of taxi trip commissions in Singapore since May 2022, partially offset by lower utilisation levels in China. On a q-o-q basis, turnover was down 4.2% given seasonality factor and lower Singapore job volumes (1Q23: ~8m vs 4Q22: ~9m).
• Operating profit also fell by 15.4% q-o-q dragged by higher operating costs such as increased IT expenses.
• On a positive note, ComfortDelGro has reduced its daily taxi rental to 10% from 15% previously wef 1 Apr 2023 as drivers' income has improved significantly following reopening of the economy.

Room for cab booking commissions to go up

• Read more at SGinvestors.io.

Eric Ong Maybank Research | https://www.maybank-ke.com.sg/ 2023-05-16 SGinvestors.io

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