- ComfortDelGro (SGX:C52) provided a 1Q23 business update yesterday, with net profit of S$32.8m below ours and the street’s expectations. The miss was mainly due to lower operating profit margins for both the Public Transport and Taxi segments.
- - Read this at SGinvestors.io -
- Taxi operations in Singapore was stronger but this was offset by incentive spend in China where the environment remains relatively challenging, though this is expected to improve in 2H23 with continued reopening in China.
Inflation and supply issues pressuring margins
- - Read this at SGinvestors.io -
- As mentioned in our earlier reports, the segment will also be affected from 2023 onwards by the full year impact of an amendment to the service fee payable by the LTA on several public bus contracts. The UK Public Transport Services segment will also be affected in 2023 by a pay increase for drivers, although contractual indexation mechanisms in place will partially compensate for this in due course.
- Overall, while demand for ComfortDelGro’s services is gradually recovering, contract renewals and supply issues would cap the margin recovery to 2019 levels.
- Given the weaker than expected results, we adjust our estimates and lower our fair value estimate for ComfortDelGro to S$1.25.
Improvement in ESG score over the years
- Read more at SGinvestors.io.
Above is the excerpt from report by OCBC Investment Research.
Clients of OCBC Securities may be the first to access the full report in PDF @ https://www.iocbc.com/.
OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2023-05-16
Previous report by OCBC:
2023-02-28 ComfortDelGro - Cost Inflation Biting Amidst Pick Up In Mobility.
Price targets by 5 other brokers at ComfortDelGro Target Prices.
Listing of research reports at ComfortDelGro Analyst Reports.
Relevant links:
ComfortDelGro Share Price History,
ComfortDelGro Announcements,
ComfortDelGro Dividends & Corporate Actions,
ComfortDelGro News Articles
