ComfortDelGro Corp Ltd Back to core profitability February 22, 2021 605

PSR Recommendation: BUY Status: Maintained
Target Price: 1.83
  • 4Q20 PATMI is 40% below expectations due to lower-than-expected public transport revenue and earnings.
  • QoQ, 4Q20 EBIT swung from S$0.2mn loss in 3Q20 to S$29.7mn profit, excluding government relief. Taxis returned to profitability in 4Q20.
  • Comfort is emerging out of the pandemic with an even stronger balance sheet. Net cash of S$279mn was up from S$64mn in FY19.
  • Recovery is underway with economic reopening, rebound in fuel index and dialling back of taxi rebates. Maintain BUY and DCF target price of S$1.83 (WACC 7.7%). Taxis to lead the rebound with lower rental relief. Public transport to lag as traffic volumes are still almost 30% below pre-pandemic levels. Our FY21e forecasts are relatively unchanged.

The Positives

+ QoQ improvement in revenue and earnings. QoQ, revenue increased S$69mn to S$885mn. EBIT swung back to a positive S$29.7mn from S$0.2mn losses in 3Q20, excluding government relief. The improvement came from taxi operations, which returned to a profit of S$9.7mn from 3Q20’s -S$7.2mn.

+ Healthy cash flows. Operating cash flow in 4Q20 was S$143mn or an estimated S$100mn excluding government relief (4Q19: +S$206mn). Net cash spiralled to S$279mn from S$64mn in FY19. FCF in FY20 was S$513mn, up from S$377mn in FY19.


 The Negatives

– Public transport still languishing. QoQ, public transport revenue rose S$60mn to S$700.5mn . And EBIT declined from QoQ from S$8mn to S$1.6mn, excluding government relief. Profitability was worse than other smaller divisions in the group such as engineering and inspection. SBS repairs and maintenance costs rose around 10% YoY in 2H20. Money was spent on the refurbishment of ageing trains and the bus fleet, on top of the frequent cleaning of buses and trains.

– Dividends slashed. Final dividend was 1.43 cents, an 85% plunge from the 9.79 cents paid in FY19. There was no interim dividend in 1H20, unlike 1H19’s 4.5 cents. Payout ratio was 50% in FY20, down from 80% in FY19.

Notify of
Inline Feedbacks
View all comments

About the author

Profile photo of Paul Chew

Paul Chew
Head of Research
Phillip Securities Research Pte Ltd

Paul has 20 years of experience as a fund manager and sell-side analyst. During his time as fund manager, he has managed multiple funds and mandates including capital guaranteed, dividend income, renewable energy, single country and regionally focused funds.

He graduated from Monash University and had completed both his Chartered Financial Analyst and Australian CPA programme.

Get access to all the latest market news, reports, technical analysis
by signing up for a free account today!