The outlook is positive. We expect Public Transport Services to continue driving earnings growth in FY19 mainly from narrowing of DTL loss. Recent acquisitions in Singapore, Australia and UK are also expected to contribute positively to Group earnings. While the entrance of Go-Jek may exert some near term pressure on the taxi business segment, we do not expect it to be as prolonged or severe as during the Grab-Uber era. A business model based on artificially cheap fares and predatory pricing has proved to be unsustainable.
Downgrade to ACCUMULATE due to recent price appreciation; slightly higher target price of $2.72
Our target price gives an implied FY19e forward P/E multiple of 18.5 times. We also think there is scope for higher dividend in FY19.