The outlook is positive. Although immediate-term earnings are weighed down by weaker Singapore Taxi business and foreign currency translation effects, there are several visible developments in the pipeline: (1.) opening of DTL3 to contribute positively from 4Q17, (2.) full year impact of BCM in 2017, (3.) Seletar bus package contribute positively from 1Q18. Consequently, we see PATMI bottoming this year. Positive catalyst if ComfortDelGro is awarded the contract to operate the Thomson-East Coast Line.
Upgrade to Buy from Accumulate; lower target price of S$2.78 (previous: S$3.02)
Made some tweaks to our assumptions. FY17e/FY18e revenue is -0.4%/-0.9% from previous and PATMI is +3.1%/+1.2% from previous. We also have a higher WACC of 7.8% (previously: 7.5%). Our target price represents an implied 20.6x FY17e forward P/E multiple, compared to the Straits Times Index twelve-month forward P/E multiple of 14.7x.