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Singapore
Results Review
15 May 2012
Buy (unchanged)
Share price: Target price: SGD 1.46 SGD 1.85 (unchanged)
ComfortDelGro Corp
Looking overseas for greener pastures
Decent set of 1Q results. ComfortDelGros (CDG) 1Q12 earnings of SGD 54 mil were in line with forecasts, given that this was a seasonally weak quarter. Encouragingly, revenue was 7% higher YoY due to growth from almost every business segment. It was also commendable that CDG managed to achieve a 7% higher operating profit YoY despite pressures of staff and fuel cost. We maintain our BUY recommendation, with Target Price unchanged based on its diversified business model which enables it to benefit from growth markets overseas. Almost 50% of operating profit from overseas. Earnings derived from overseas operations comprised 49% of total operating profit (Figure 1), up from 41%, partially caused by the fact that its Singapore bus operations (SBS Transit) made an operating loss of SGD 4 mil excluding advertising and rental revenue. Despite challenges faced within the local public transport scene, especially with no mandated fare increases for 2012, we believe that its overseas operations can more than pick up the slack, as evidenced by current 1Q12 results. Still buses and taxis leading the way. Figure 2 clearly shows that buses and taxi operations remain the key component of revenue growth, with revenue increases of 5% and 9% YoY respectively. On the profitability front, CDGs bus profit growth was derived primarily from the UK (+SGD 4.9 mil) and Australia (+SGD 4.3 mil). In contrast, Taxi profitability improvement was derived mainly from China (+SGD 1.7 mil). From this perspective, CDGs strategy of geographical diversification across its business segments seems to be paying off. Multi-national transport operator - reiterate BUY. As a global transport operator within multiple modes of land transport, we believe that CDG will be one of the few transport operators with the ability to emerge profitably amidst the backdrop of escalating operating costs. Its near-term growth will likely be spearheaded by its overseas operations. Maintain BUY, with TP unchanged at SGD 1.85, pegged at 16x FY12 PER, 1 standard deviation above its historical mean.
ComfortDelGro Corp Summary Earnings Table
FYE Dec (SGD m) Revenue EBITDA Recurring Net Profit Recurring Basic EPS (cents) EPS growth (%) DPS (cents) 2010 3,206.9 679.3 228.5 11.0 4.1 5.5 13.3 4.7 3.8 1.69 6.2 13.1 5.4 2011 3,411.1 715.8 235.6 11.3 3.0 6.0 13.0 4.3 4.1 1.61 2.2 12.8 5.3 2012F 3,617.6 735.8 241.5 11.5 2.4 6.0 12.6 4.4 4.1 1.52 8.4 12.4 5.2 253 2013F 3,841.6 773.7 253.1 12.1 4.7 6.0 12.1 4.1 4.1 1.43 4.5 12.2 5.3 263 2014F 4,062.7 807.8 261.9 12.5 3.4 6.0 11.7 3.8 4.1 1.35 0.2 11.9 5.3 264
Stock Information
Description: Provides bus, taxi, car leasing and rental, automotive engineering, maintenance services and diesel sales. The group also operates vehicle inspection, assessment, and advertising services. Ticker: Shares Issued (m): Market Cap (USD m): 3-mth Avg Daily Turnover (USD m): ST Index: Free float (%): Major Shareholders: SINGAPORE LABOUR FOUNDATION THE CAPITAL GROUP COMPANIES SILCHESTER INTERNATIONAL INVESTORS CD SP 2,091.5 2,429.9 3.2 2,864.1 75.5 % 12.1 6.5 5.9
Key Indicators
ROE annualised (%) Net debt (SGD m): NAV/shr (SGD): Interest cover (x): 11.0 17.5 0.934 11.4
Historical Chart
1.70 CD SP Equity 1.60 1.50 1.40 1.30 1.20 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12
PER EV/EBITDA (x) Div Yield (%) P/BV(x) Net Gearing (%) ROE (%) ROA (%) Consensus Net Profit (SGD m) Source: Company, Maybank-KE
SGD1.58 / SGD1.25 3-mth -2.0 2.2 6-mth 3.9 2.7 1-yr -2.0 8.2 YTD 3.2 -4.7
ComfortDelgro
Figure 1: Geographical Segment Revenue and Operating Profit Overseas operating profit contribution now at 48.8% vs 41.3% in 1Q11
Source: Company
Figure 2: Revenue growth in all major business segments Total revenue growth at 6.5% YoY
Source: Company
15 May 2012
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ComfortDelgro Figure 3: Detailed breakdown of CDGs business segment revenue and profit.
Source: Company
P/E(x) 21.0 19.0 17.0 15.0 13.0 11.0 9.0 May06 May07 May08 May09 May10 May11 May04 May05 May12
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+=16.6x Mean=15.0x
=13.5x
15 May 2012
ComfortDelgro
PROFIT AND LOSS (SGD m) FYE Dec BALANCE SHEET (SGD m)
Sales Cost of goods sold Gross profit Other income Operating expenses Operating profit Net interest income (exp) Share of associates Net exceptional Pretax income Income taxes Minority interest Net income EPS (cts) EBITDA
2010 3,206.9 0.0 3,206.9 0.0 -2,818.5 388.4 -28.5 6.4 0.0 366.3 -78.1 59.7 228.5 11.0 679.3
2011 3,411.1 0.0 3,411.1 0.0 -3,011.9 399.2 -25.3 5.3 0.0 379.2 -81.7 61.9 235.6 11.3 715.8
2012F 3,617.6 0.0 3,617.6 0.0 -3,213.3 410.3 -27.0 5.3 0.0 388.5 -83.5 63.5 241.5 11.5 735.8
2013F 3,841.6 0.0 3,841.6 0.0 -3,419.6 428.0 -28.0 5.3 0.0 405.2 -87.1 65.0 253.1 12.1 773.7
2014F 4,062.7 0.0 4,062.7 0.0 -3,626.6 442.1 -29.0 5.3 0.0 418.4 -90.0 66.5 261.9 12.5 807.8
FYE Dec
CASH FLOW (SGD m) FYE Dec
Total assets Current assets Cash ST investments Trade & other receivables Inventory Other assets LT investments Net fixed assets Others Intangible Total liabilities Current liabilities Trade & other payables ST debt Others Long-term liabilities LT debt Others Total equity Paid-in capital Reserve Others Minority interest
KEY RATIOS
2010 4,381.4 1,000.5 566.7 0.0 369.3 58.7 3,380.9 144.8 2,768.8 321.5 145.8 2,033.8 918.2 690.0 188.2 40.0 1,115.6 523.1 592.5 2,347.6 565.5 1,199.3 35.7 547.1
2011 4,589.2 979.4 576.7 0.0 346.2 56.5 3,609.8 92.1 3,011.0 361.0 145.7 2,115.3 1,002.1 783.8 198.3 20.0 1,113.2 433.6 679.6 2,473.9 568.6 1,318.4 4.5 582.4
2012F 4,679.4 901.7 431.4 0.0 397.9 72.4 3,777.7 132.8 3,138.2 361.0 145.7 2,083.6 1,158.6 938.6 200.0 20.0 925.0 450.0 475.0 2,595.8 568.6 1,439.1 5.7 582.4
2013F 4,865.3 1,036.7 537.3 0.0 422.6 76.8 3,828.6 129.4 3,192.5 361.0 145.7 2,142.8 1,217.8 987.8 210.0 20.0 925.0 450.0 475.0 2,722.4 568.6 1,565.7 5.7 582.4
2014F 5,054.9 1,193.0 664.8 0.0 446.9 81.3 3,861.9 129.4 3,225.8 361.0 145.7 2,201.5 1,276.5 1,036.5 220.0 20.0 925.0 450.0 475.0 2,853.4 568.6 1,696.7 5.7 582.4
2010 592.6 366.3 290.9 -61.0 -3.6 -399.7 -394.9 -35.1 30.3 -111.8 5.2 69.5 -74.4 -112.1 81.1 197.7
2011 777.5 379.2 316.6 98.5 -16.8 -486.5 -489.9 -13.3 16.7 -281.0 6.2 -119.9 -52.3 -115.0 10.0 287.6
2012F 664.4 388.5 325.6 87.2 -136.9 -490.7 -450.0 -40.7 0.0 -319.0 0.0 18.1 -216.4 -120.7 -145.3 214.4
2013F 629.0 405.2 345.7 20.2 -142.2 -396.6 -400.0 3.4 0.0 -126.5 0.0 10.0 -9.9 -126.6 105.9 229.0
2014F 659.8 418.4 365.6 19.9 -144.2 -399.0 -399.0 0.0 0.0 -133.3 0.0 10.0 -12.3 -131.0 127.5 260.8
FYE Dec
2010
2011
2012F
2013F
2014F
Operating cash flow Pretax income Depreciation & amortisation Change in working capital Others Investment cash flow Net capex Change in LT investment Change in other assets Financing cash flow Change in share capital Net change in debt Change in other LT liab. Dividends paid Net cash flow Free cashflow
Growth (% YoY) Sales OP EBITDA NP EPS Profitability (%) Gross margin Operating margin EBITDA margin Net profit margin ROA ROE Stability Gross debt (cash)/equity (%) Net debt (cash)/equity (%) Int. coverage (X) Int. & ST debt coverage (X) Cash flow int. coverage (X) Cash flow int. & ST debt (X) Current ratio (X) Quick ratio (X) Net debt (cash) ($'m) Per share data (cts) EPS CFPS BVPS SPS EBITDA/share DPS
5.1 11.0 7.9 4.1 4.1 NA 12.1 21.2 7.1 5.4 13.1 30.3 6.2 10.9 1.7 16.6 2.6 1.1 1.0 144.6 11.0 28.4 86.2 153.7 32.6 5.5
6.4 2.8 5.4 3.1 3.0 NA 11.7 21.0 6.9 5.3 12.8 25.5 2.2 11.3 1.7 22.0 3.3 1.0 0.9 55.2 11.3 37.2 90.5 163.2 34.3 6.0
6.1 2.8 2.8 2.5 2.4 NA 11.3 20.3 6.7 5.2 12.4 25.0 8.4 11.7 1.7 19.0 2.8 0.8 0.7 218.6 11.5 31.8 96.2 173.0 35.2 6.0
6.2 4.3 5.1 4.8 4.7 NA 11.1 20.1 6.6 5.3 12.2 24.2 4.5 12.2 1.7 18.0 2.6 0.9 0.8 122.7 12.1 30.0 102.2 183.5 37.0 6.0
5.8 3.3 4.4 3.5 3.4 NA 10.9 19.9 6.4 5.3 11.9 23.5 0.2 12.6 1.7 18.9 2.6 0.9 0.9 5.2 12.5 31.5 108.3 193.9 38.5 6.0
15 May 2012
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ComfortDelgro
RESEARCHOFFICES
REGIONAL
P K BASU Regional Head, Research & Economics (65) 6432 1821 pk.basu@maybank-ke.com.sg WONG Chew Hann, CA Regional Head of Institutional Research (603) 2297 8686 wchewh@maybank-ib.com THAM Mun Hon Regional Strategist (852) 2268 0630 thammunhon@kimeng.com.hk ONG Seng Yeow Regional Products & Planning (852) 2268 0644 ongsengyeow@maybank-ke.com.sg
ECONOMICS
Suhaimi ILIAS Chief Economist Singapore | Malaysia (603) 2297 8682 suhaimi_ilias@maybank-ib.com Luz LORENZO Economist Philippines | Indonesia (63) 2 849 8836 luz_lorenzo@maybank-atrke.com Chaiyachoke SUWISUTTANGKUL Economist Thailand (662) 658 6300 chaiyachoke.s@maybank-ke.co.th
MALAYSIA
WONG Chew Hann, CA Head of Research (603) 2297 8686 wchewh@maybank-ib.com Strategy Construction & Infrastructure Desmond CHNG, ACA (603) 2297 8680 desmond.chng@maybank-ib.com Banking - Regional LIAW Thong Jung (603) 2297 8688 tjliaw@maybank-ib.com Oil & Gas Automotive Shipping ONG Chee Ting (603) 2297 8678 ct.ong@maybank-ib.com Plantations Mohshin AZIZ (603) 2297 8692 mohshin.aziz@maybank-ib.com Aviation Petrochem Power YIN Shao Yang, CPA (603) 2297 8916 samuel.y@maybank-ib.com Gaming Regional Media Power WONG Wei Sum, CFA (603) 2297 8679 weisum@maybank-ib.com Property & REITs LEE Yen Ling (603) 2297 8691 lee.yl@maybank-ib.com Building Materials Manufacturing Technology LEE Cheng Hooi Head of Retail chenghooi.lee@maybank-ib.com Technicals
SINGAPORE
Stephanie WONG Head of Research (65) 6432 1451 swong@maybank-ke.com.sg Strategy Small & Mid Caps Gregory YAP (65) 6432 1450 gyap@maybank-ke.com.sg Technology & Manufacturing Telcos - Regional Wilson LIEW (65) 6432 1454 wilsonliew@maybank-ke.com.sg Hotel & Resort Property & Construction James KOH (65) 6432 1431 jameskoh@maybank-ke.com.sg Logistics Resources Consumer Small & Mid Caps YEAK Chee Keong, CFA (65) 6433 5730 yeakcheekeong@maybank-ke.com.sg Healthcare Offshore & Marine Alison FOK (65) 6433 5745 alisonfok@maybank-ke.com.sg Services S-chips Bernard CHIN (65) 6433 5726 bernardchin@maybank-ke.com.sg Transport (Land, Shipping & Aviation) ONG Kian Lin (65) 6432 1470 ongkianlin@maybank-ke.com.sg REITs / Property Wei Bin (65) 6432 1455 weibin@maybank-ke.com.sg S-chips Small & Mid Caps
THAILAND
Mayuree CHOWVIKRAN Head of Research (66) 2658 6300 ext 1440 mayuree.c@maybank-ke.co.th Strategy Maria BRENDA SANCHEZ LAPIZ Co-Head of Research Dir (66) 2257 0250 | (66) 2658 6300 ext 1399 Maria.L@maybank-ke.co.th Andrew STOTZ Strategist (66) 2658 6300 ext 1399 Andrew@maybank-ke.co.th Suttatip PEERASUB (66) 2658 6300 ext 1430 suttatip.p@maybank-ke.co.th Media Commerce Sutthichai KUMWORACHAI (66) 2658 6300 ext 1400 sutthichai.k@maybank-ke.co.th Energy Petrochem Termporn TANTIVIVAT (66) 2658 6300 ext 1520 termporn.t@maybank-ke.co.th Property Woraphon WIROONSRI (66) 2658 6300 ext 1560 woraphon.w@maybank-ke.co.th Banking & Finance Jaroonpan WATTANAWONG (66) 2658 6300 ext 1404 jaroonpan.w@maybank-ke.co.th Transportation Small cap. Suchot THIRAWANNARAT (66) 2658 6300 ext 1550 suchot.t@maybank-ke.co.th Automotive Construction Materials Soft commodity
VIETNAM
Michael KOKALARI, CFA Head of Research +84 838 38 66 47 michael.kokalari@kimeng.com.vn Strategy Nguyen Thi Ngan Tuyen +84 844 55 58 88 x 8081 tuyen.nguyen@kimeng.com.vn Food and Beverage Oil and Gas Ngo Bich Van +84 844 55 58 88 x 8084 van.ngo@kimeng.com.vn Banking Nguyen Quang Duy +84 844 55 58 88 x 8082 duy.nguyenquang@kimeng.com.vn Rubber Dang Thi Kim Thoa +84 844 55 58 88 x 8083 thoa.dang@kimeng.com.vn Consumer Nguyen Trung Hoa +84 844 55 58 88 x 8088 hoa.nguyen@kimeng.com.vn Steel Sugar Macro
INDONESIA
Katarina SETIAWAN Head of Research (62) 21 2557 1125 ksetiawan@kimeng.co.id Consumer Strategy Telcos Lucky ARIESANDI, CFA (62) 21 2557 1127 lariesandi@kimeng.co.id Base metals Coal Oil & Gas Rahmi MARINA (62) 21 2557 1128 rmarina@kimeng.co.id Banking Multifinance Pandu ANUGRAH (62) 21 2557 1137 panugrah@kimeng.co.id Auto Heavy equipment Plantation Toll road Adi N. WICAKSONO (62) 21 2557 1130 anwicaksono@kimeng.co.id Generalist Anthony YUNUS (62) 21 2557 1134 ayunus@kimeng.co.id Cement Infrastructure Property Arwani PRANADJAYA (62) 21 2557 1129 apranadjaya@kimeng.co.id Technicals
INDIA
Jigar SHAH Head of Research (91) 22 6623 2601 jigar@kimeng.co.in Oil & Gas Automobile Cement Anubhav GUPTA (91) 22 6623 2605 anubhav@kimeng.co.in Metal & Mining Capital goods Property Haripreet BATRA (91) 226623 2606 haripreet@kimeng.co.in Software Media Ganesh RAM (91) 226623 2607 ganeshram@kimeng.co.in Telecom Contractor Darpin SHAH (91) 226623 2610 darpin@kimeng.co.in Banking & Financial Services Gagan KWATRA (91 )226623 2612 gagan@kimeng.co.in Small Cap
PHILIPPINES
Luz LORENZO Head of Research +63 2 849 8836 luz_lorenzo@maybank-atrke.com Strategy Laura DY-LIACCO (63) 2 849 8840 laura_dyliacco@maybank-atrke.com Utilities Conglomerates Telcos Lovell SARREAL (63) 2 849 8841 lovell_sarreal@maybank-atrke.com Consumer Media Cement Mining Kenneth NERECINA (63) 2 849 8839 kenneth_nerecina@maybank-atrke.com Conglomerates Property Ports/ Logistics Katherine TAN (63) 2 849 8843 kat_tan@maybank-atrke.com Banks Construction
15 May 2012
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ComfortDelgro
Definition of Ratings
Maybank Kim Eng Research uses the following rating system: BUY HOLD SELL Total return is expected to be above 15% in the next 12 months Total return is expected to be between -15% to +15% in the next 12 months Total return is expected to be below -15% in the next 12 months
Applicability of Ratings
The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies.
15 May 2012
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ComfortDelgro
Maybank Investment Bank Berhad (A Participating Organisation of Bursa Malaysia Securities Berhad) 33rd Floor, Menara Maybank, 100 Jalan Tun Perak, 50050 Kuala Lumpur Tel: (603) 2059 1888; Fax: (603) 2078 4194
Malaysia
Maybank Kim Eng Securities Pte Ltd Maybank Kim Eng Research Pte Ltd 9 Temasek Boulevard #39-00 Suntec Tower 2 Singapore 038989 Tel: (65) 6336 9090 Fax: (65) 6339 6003
Singapore
London
Maybank Kim Eng Securities (London) Ltd 6/F, 20 St. Dunstans Hill London EC3R 8HY, UK Tel: (44) 20 7621 9298 Dealers Tel: (44) 20 7626 2828 Fax: (44) 20 7283 6674
New York
Maybank Kim Eng Securities USA Inc 777 Third Avenue, 21st Floor New York, NY 10017, U.S.A. Tel: (212) 688 8886 Fax: (212) 688 3500
Stockbroking Business:
Level 8, Tower C, Dataran Maybank, No.1, Jalan Maarof 59000 Kuala Lumpur Tel: (603) 2297 8888 Fax: (603) 2282 5136
Kim Eng Securities (HK) Ltd Level 30, Three Pacific Place, 1 Queens Road East, Hong Kong Tel: (852) 2268 0800 Fax: (852) 2877 0104
Hong Kong
Indonesia
PT Kim Eng Securities Plaza Bapindo Citibank Tower 17th Floor Jl Jend. Sudirman Kav. 54-55 Jakarta 12190, Indonesia Tel: (62) 21 2557 1188 Fax: (62) 21 2557 1189
India
Kim Eng Securities India Pvt Ltd 2nd Floor, The International 16, Maharishi Karve Road, Churchgate Station, Mumbai City - 400 020, India Tel: (91).22.6623.2600 Fax: (91).22.6623.2604
Maybank ATR Kim Eng Securities Inc. 17/F, Tower One & Exchange Plaza Ayala Triangle, Ayala Avenue Makati City, Philippines 1200 Tel: (63) 2 849 8888 Fax: (63) 2 848 5738
Philippines
Maybank Kim Eng Securities (Thailand) Public Company Limited 999/9 The Offices at Central World, 20th - 21st Floor, Rama 1 Road Pathumwan, Bangkok 10330, Thailand Tel: (66) 2 658 6817 (sales) Tel: (66) 2 658 6801 (research)
Thailand
Vietnam
In association with
Saudi Arabia
In association with
Kim Eng Vietnam Securities Company 1st Floor, 255 Tran Hung Dao St. District 1 Ho Chi Minh City, Vietnam Tel : (84) 838 38 66 36 Fax : (84) 838 38 66 39
Anfaal Capital Villa 47, Tujjar Jeddah Prince Mohammed bin Abdulaziz Street P.O. Box 126575 Jeddah 21352 Tel: (966) 2 6068686 Fax: (966) 26068787
Connie TAN connie@maybank-ke.com.sg Tel: (65) 6333 5775 US Toll Free: 1 866 406 7447
Eddie LAU eddielau@kimeng.com.hk Tel: (852) 2268 0800 US Toll Free: 1 866 598 2267
www.maybank-ke.com | www.kimengresearch.com.sg
APPENDIX I
Additional information on mentioned securities is available on request. Jurisdiction Specific Additional Disclaimers: THIS RESEARCH REPORT IS STRICTLY CONFIDENTIAL TO THE RECIPIENT, MAY NOT BE DISTRIBUTED TO THE PRESS OR OTHER MEDIA, AND MAY NOT BE REPRODUCED IN ANY FORM AND MAY NOT BE TAKEN OR TRANSMITTED INTO THE REPUBLIC OF KOREA, OR PROVIDED OR TRANSMITTED TO ANY KOREAN PERSON. FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF SECURITIES LAWS IN THE REPUBLIC OF KOREA. BY ACCEPTING THIS REPORT, YOU AGREE TO BE BOUND BY THE FOREGOING LIMITATIONS. THIS RESEARCH REPORT IS STRICTLY CONFIDENTIAL TO THE RECIPIENT, MAY NOT BE DISTRIBUTED TO THE PRESS OR OTHER MEDIA, AND MAY NOT BE REPRODUCED IN ANY FORM AND MAY NOT BE TAKEN OR TRANSMITTED INTO MALAYSIA OR PROVIDED OR TRANSMITTED TO ANY MALAYSIAN PERSON. FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF SECURITIES LAWS IN MALAYSIA. BY ACCEPTING THIS REPORT, YOU AGREE TO BE BOUND BY THE FOREGOING LIMITATIONS. Without prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply if the reader is receiving or accessing this report in or from other than Singapore. As of 15 May 2012, Maybank Kim Eng Research Pte. Ltd. and the covering analyst do not have any interest in ComfortDelgro. Analyst Certification: The views expressed in this research report accurately reflect the analyst's personal views about any and all of the subject securities or issuers; and no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in the report. 2012 Maybank Kim Eng Research Pte Ltd. All rights reserved. Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of Maybank Kim Eng Research Pte. Ltd. Maybank Kim Eng Research Pte. Ltd. accepts no liability whatsoever for the actions of third parties in this respect.
15 May 2012
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