Wednesday, January 23, 2013

Comfort Delgro

Comfort Delgro: Nomura maintains Buy and raises TP to$2.13 from $1.86. Note that SG’s long-term goal of having at least 70% (from current 63%) of its population relying on public transport by 2020 means the two incumbentgovt-linked operatorsstand to benefit from higher ridership, particularly in the bus and railsegments. House value the taxi business at 19x FY13F (v.s. 15x FY13F) to reflect theimproved prospects for its business following the sharp rise in COEs andthe potential of its taxi business to increase market share. Also raise valuations for UK bus business from 8x to 11x FY13F P/E tobetter reflect the defensive earnings profile.Separately, include the value of its stake in Cabcharge Australia toreflect potential monetisation of its stake.Catalysts includeshigher taxi rentals; Fare increase; higher dividends

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