ComfortDelGro

[winston]

not vested

Speed bumps

1Q20 net profit fell 49% yoy, below expectations at 20.7% of our FY20F, as the two largest segments (public transport and taxi) were hurt by Covid-19.

Taxi segment could go into the red with rental relief measures to keep drivers.

Public transport segment is also impacted, but JSS will be a significant help.

Maintain Hold with a lower TP of S$1.50.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 0C00FF5BBC

[behappyalways]

ComfortDelGro Taxi to halve taxi rental in June after two months of full rental waivers
https://www.theedgesingapore.com/news/c ... al-waivers

[winston]

not vested

What’s New

Upgrade to BUY, TP raised to S$1.68 based on 16.8x FY20F/21F earnings pegged to historical average PE

Re-opening of economy, jobs support and “worst over” mentality could provide support to share price

Sell down on removal from MSCI Singapore an opportunity to accumulate

Trading at 1.2x P/BV, -2 SD below historical average

Source: DBS

https://researchwise.dbsvresearch.com/R ... =fefcgkhfj

[winston]

not vested

May 26, 2020

Analysts slash earnings estimates, price targets for ComfortDelGro amid bleak near term outlook

SINGAPORE (May 26): Although most companies are increasingly optimistic as the world emerges from a lockdown, market watchers say ComfortDelGro’s (CDG) recovery could be “gradual” at best.

As such, brokerages have taken to adjusting the company’s earnings estimates to factor in a bleak outlook.

Both RHB Group Research analyst Shekar Jaiswal and DBS Group Research analyst Andy Sim have slashed their FY2020 earnings forecasts for the company by 19% and 7% respectively, while Maybank Kim Eng Research analyst Kareen Chan has reduced FY20E EBIT margin forecast by 50 basis points to reflect a slower pace of decrease in operating costs.

CGS-CIMB Research analyst Ong Khang Chuen has lowered his FY2020 earnings per share (EPS) forecast by 3.4%, to factor in higher taxi rental rebates and lower service fees and ridership for public transportation.

DBS’s Sim says continued calls for social distancing and work from home arrangements are likely to limit daily commute, affecting Singapore’s largest taxi operator directly.

“The next few months would still be challenging for CDG particularly its taxi operations as well as subdued public transport services,” he says.

Sim also notes that the company is slated to be excluded from the MSCI Singapore Index from May 29, and could still put significant pressure on the counter’s share price as index-based funds move to reduce their near-term exposure.

To be sure, 1QFY2020 was far from a good one for CDG, missing analysts forecasts due primarily to the Covid-19 pandemic. The company reported earnings of $36.0 million, some 48.9% lower than earnings of $70.4 million a year ago.

This came on the back of a 9% slide in revenue to $862.4 million from $947.3 million last year as all business segments booked declines due to the Covid-19 pandemic.

ComfortDelGro's 1Q earnings dive 49% to $36 mil, lockdowns to 'significantly hurt' 1H business

Specifically, while analysts had been bracing themselves for contractions in taxi and China operations, CDG’s public transport segment had posted a deeper drop than analysts had envisioned.

“Fall in public transport services revenue were mainly affected by a decrease in rail ridership in Singapore, bad weather and Covid-19 impact in the UK resulting in fewer routes, as well as weaker AUD,” says Maybank Kim Eng’s Chan.

“Operating profit margin was narrowed by high fixed cost in rail operations,” adds Chan.
Looking ahead, analysts say CDG’s negative financials are likely to continue through 2QFY2020 as the Covid-19 pandemic continues to rage on. In particular, the company’s taxi segment is likely to remain the “key drag.”

“Even after the circuit breaker measure is lifted in Singapore, we believe cabbies’ earnings will take at least 3-6 months to normalise given the weak tourism sector and continued safe distancing measures by the government,” says CGS-CIMB Research’s Ong.

“We do not rule out a further extension of the rental rebates, as it is crucial for CDG to retain its taxi fleet through this Covid-19 crisis,” he adds.

RHB’s Jaiswal adds that the company’s public transport business is likely to record lower earnings in 2QFY2020 due to declines in MRT ridership and reduction in bus frequencies.

“While Covid-19 mostly impacted overseas businesses negatively in 1QFY2020, its effect on Singapore businesses, or 60% of revenue, will be visible in 2QFY2020,” says Jaiswal.

“With expected near term earnings weakness and likely slow recovery in business to pre-Covid-19 levels, we see limited catalysts to turn positive on earnings and share price outlook,” he adds.

However, Jaiswal notes that CDG’s net cash balance sheet of $26.4 million could be “put to good use” at a time like this, especially since the company does not expect to undertake any new capital expenditure for the rest of the year.

In addition, Jaiswal says CDG also has available facilities of some $700 million to undertake an “accretive acquisition.”

DBS, RHB and CGS-CIMB are reiterating their “hold” calls on CDG. Both DBS and CGS-CIMB have lowered their target prices for the stock to $1.50, representing a downside of 2.9%. Meanwhile, RHB’s target price of $1.45 represents a 6% downside for the counter.

Maybank has bucked the trend with a “buy” call on CDG, terming the company to be a “beneficiary of post-Covid-19” with a taxi business that will be “on its path of recovery” as social distancing policies ease. The brokerage has a target price of $1.98 on the stock, representing a 29% upside.

Source: The Edge

https://www.theedgesingapore.com/capita ... amid-bleak

[winston]

not vested

ComfortDelGro (CD SP, BUY, TP: SGD1.65)

Known Negatives Are Priced In; Upgrade To BUY

Company Update

Upgrade to BUY from Neutral, new SGD1.65 TP from SGD1.45, 15% upside with c.5% FY20F yield.

ComfortDelGro has priced in the soft earnings for 2Q20F and its exclusion from the MSCI Singapore index.

With the swift reopening of Singapore’s economy and additional cash flow support from the latest Fortitude Budget, 2H20 earnings could be better than Street’s estimate.

Our FY20F profit is 17% above Street’s.

With its 1-year forward P/E below the historical average, investors should start accumulating ahead of the expected strong rebound in FY21 earnings.

Source: RHB

https//research.rhbtradesmart.com/attachments/74/rhb-report-sg_comfortdelgro_company-update_20200602_rhb-461258618008057365ed59491d334f.pdf

[winston]

not vested

ComfortDelGro - Bumpy ride, BUY on dips (CD SP, CP SGD1.52, BUY, TP SGD1.98, Industrials)

ComfortDelGro issued a profit warning. BUY on weakness.

1HFY20 losses were likely due to impairment in its taxi division.

We had already factored in operation weakness into our forecasts.

Structural growth is intact, while CDG remains a key beneficiary from rising ridership as Singapore emerges from the lockdown.

Maintain DCF-based SGD1.98 TP. 2QFY20 results in mid-Aug.

Downside risk: negative operating leverage.

Source: Maybank

https://www.kelive.com/KimEng/servlet/P ... &rid=52497

[winston]

YOU WILL STILL NEED TO MOVE

Transport activity recovering
Eye on larger overseas projects
Buy with a longer term view

Covid-19 has impacted transport activity significantly in Singapore and overseas.

In Singapore, transport activity slowed down significantly in April and May, but has been recovering in recent times.

CD would also benefit from the government’s Jobs Support Scheme given the higher percentage of local employees, and we note that for the Singapore public bus operations, CD is not exposed to fare revenue, as the group operates under the bus contracting model.

CD’s net gearing remained low at 1.3% as at end FY19, and the group is in a position to undertake more acquisitions when the opportunity arises.

As mentioned in our earlier report, we expect Covid-19 to have a significant impact to the taxi and rail business, though this should recover over the longer term.

Fair value: 1.85

Source: OCBC

[winston]

not vested

ComfortDelGro (CD SP, BUY, TP: SGD1.65)

Look Beyond Near-Term Weakness; BUY

Company Update

Reiterate BUY with SGD1.65 TP, 12% upside and c.5% 2021F yield.

ComfortDelGro’s share price reacted negatively after it announced expectations of a 1H20 loss and extended the 50% taxi rental waiver until 15 Jul.

Even if there is a more gradual reopening of Singapore’s economy, we believe CD should report QoQ profit improvement as we get to the end of 2020, and strong earnings growth in 2021.

With its forward P/E below the historical average, we maintain that investors should use the current price weakness to accumulate the stock.

Source: RHB

https://research.rhbtradesmart.com/atta ... 16f35b.pdf

[winston]

not vested

ComfortDelGro (CD SP, BUY, TP: SGD1.65)

Look Beyond Upcoming Weak 1H20 Results; BUY

Company Update

Reiterate BUY, SGD1.65 TP, 19% upside and c.6% 2021F yield.

ComfortDelGro’s share price has recovered by 5% from its 52-week low, and remains well-supported by a historic low P/BV.

Investors should look past the near-term earnings weakness, and use its current low share price as an opportunity to accumulate the stock – as CD remains on track to report strong earnings growth in 2021.

A faster-than-estimated recovery in public transport and taxi earnings, winning new bus contracts, and an earnings-accretive acquisition should re-rate the stock in the near term.

Source: RHB

https://research.rhbtradesmart.com/atta ... 24d101.pdf

[winston]

not vested

ComfortDelGro sinks into the red with $6 mil loss, skips interim dividend

ComfortDelGro Corporation reported a loss of $6 million for 1HFY20 ended June 30, hurt by the fallout from the Covid-19 outbreak. In the year-earlier period, the operator of buses, taxis and trains was able to generate earnings of $146.3 million.

Revenue in the same period was down 20.8% y-o-y to $1.53 billion, as ridership fell due to the circuit breaker measures.

Lim said that if not for the government subsidies, the company would have been $66.1 million in the red instead of just $6 million.

The company, tends to be generous with its dividend, will not be giving an interim dividend this time round.

The company typically reviews the carrying value of its assets only at the financial year-end periods. However, given the challenging conditions, ComfortDelGro has taken a charge of $30.8 million and the amount will be further reviewed at year-end.

As at June 30, the company holds cash and equivalent of $594.2 million, up slightly from $586.1 million as at Dec 31 2019.

ComfortDelGro closed Aug 14 at $1.39, down 1.42% for the day and down 41.3% year to date.

Source: The Edge

https://www.theedgesingapore.com/news/r ... m-dividend