CGS International May 14, 2025 ComfortDelGro: Acquisitions Bearing Fruit, Attractive Dividend Yield ComfortDelGro 1Q25 Performance: Core Net Profit Surges ComfortDelGro (CD) reported a 19% year-over-year increase in core net profit for 1Q25, primarily driven by strong contributions from its UK business and CMAC. [[1]] Revenue stood at S\$1.17 billion, aligning with forecasts. [[1]] Core net profit reached S\$48.3 million, representing 20% of full-year forecasts, influenced by a higher effective tax rate and purchase price allocation (PPA) amortization. [[1]] EBITDA margin improved year-over-year, bolstered by A2B and Addison Lee, favorable UK bus contract renewals, and new Manchester contracts initiated in January 2025. [[1]] UK Operations: A Key Growth Driver UK operations’ EBIT margin was 3.9% in 1Q25, reflecting seasonal traffic variations. [[1]] Anticipated margin improvements are expected from increased summer traffic, additional Metroline contract renewals with enhanced margins, and CMAC’s Suntransfers securing an exclusive contract with On The Beach. [[1]] On The Beach is one of the UK’s largest online holiday providers. It has a customer base of approximately 2 million passengers annually. [[1]] Acquisitions Driving Growth Addison Lee, A2B, and CMAC are expected to be key growth drivers, supported by stronger ridership in 2Q–3Q and improved margins from overseas bus operations. [[1]] FY25F operating EBIT forecast reflects an 18% year-over-year growth, with significant contributions from the Taxi and Private Transport segments. [[1]] Investment Recommendation Reiterated Add rating with a revised target price of S\$1.70, based on 16x FY26F P/E. [[1]] Attractive FY25F dividend yield at 6%. [[1]] Core net profit forecasts lowered by approximately 6% for FY25-27F, factoring in PPA amortization and a higher effective tax rate. [[1]] Potential re-rating catalysts include stronger UK earnings and major contract wins. [[1]] Key downside risks include acquisition integration challenges and margin pressures. [[1]] Key Financial Metrics and Forecasts Revenue: Projected to grow from S\$4.477 billion in Dec-24A to S\$5.422 billion in Dec-27F. [[1]] Operating EBITDA: Expected to increase from S\$691.3 million in Dec-24A to S\$779.5 million in Dec-27F. [[1]] Net Profit: Forecasted to rise from S\$210.5 million in Dec-24A to S\$248.4 million in Dec-27F. [[1]] Core EPS: Anticipated to grow from S\$0.10 in Dec-24A to S\$0.11 in Dec-27F. [[1]] DPS (Dividend Per Share): Projected to increase from S\$0.078 in Dec-24A to S\$0.092 in Dec-27F. [[1]] Financial Summary Dec-23A Dec-24A Dec-25F Dec-26F Dec-27F Revenue (S\$m) 3,880 4,477 5,136 5,288 5,422 Operating EBITDA (S\$m) 636.3 691.3 758.3 769.5 779.5 Net Profit (S\$m) 180.5 210.5 228.0 239.1 248.4 Core EPS (S\$) 0.08 0.10 0.11 0.11 0.11 Core EPS Growth 4.3% 16.6% 8.3% 4.8% 3.9% FD Core P/E (x) 18.24 15.64 14.44 13.77 13.25 DPS (S\$) 0.067 0.078 0.084 0.088 0.092 Shareholder Structure and Analyst Information Major shareholders include Silchester International Investors (8.0%), Columbia Threadneedle Investments (5.0%), and Vanguard Group (2.8%). [[1]] Analyst: Jacquelyn YOW. [[1]] Peer Comparison ComfortDelGro’s P/E ratio stands at 14.4x for CY25F and 13.8x for CY26F. [[3]] Recurring ROE is 8.5% for CY25F. [[3]] Dividend Yield is attractive at 5.5% for CY25F. [[3]] Company Ticker Recom. Price (lcl curr) Target Price (lcl curr) Market Cap (US\$ m) P/E (x) CY25F P/E (x) CY26F 3-year EPS CAGR (%) P/BV (x) CY25F P/BV (x) CY26F Recurring ROE (%) CY25F EV/EBITDA (x) CY25F EV/EBITDA (x) CY26F Dividend Yield (%) CY25F ComfortDelGro CD SP Add 1.52 1.70 2,536 14.4 13.8 6.7% 1.24 1.21 8.5% 5.3 5.1 5.5% BTS Group BTS TB Hold 4.74 6.00 2,285 92.0 72.5 na 1.21 1.20 1.3% 73.4 58.3 0.9% MTR Corp Ltd 66 HK NR 27.55 NA 22,253 9.9 9.7 -7.2% 0.88 0.84 9.2% 10.1 9.4 4.7% Kelsian Group Ltd KLS AU NR 3.14 NA 559 10.3 9.3 -10.6% 0.88 0.87 7.7% 5.9 5.9 5.4% Downer EDI Ltd DOW AU NR 6.17 NA 2,657 15.5 13.2 -0.2 1.85 1.74 12.9% 6.3 5.9 4.0% ESG Initiatives and Performance ComfortDelGro aims to reduce its greenhouse gas (GHG) emission intensity by 55% by 2032 (base year: 2019). [[4]] Hybrid/electric vehicles constitute a significant portion of its fleet across Singapore, China, Australia, and the UK. [[4]] Committed to Science-Based Targets initiative (SBTi). [[4]] Operational Reliability Downtown Line (DTL) achieved a record 8.12 million train-km in 2023. [[4]] Continual improvements in safety metrics and reliability ratings. [[4]] Awards and Recognition Included in the Dow Jones Sustainability Index (DJSI) – Asia Pacific for the sixth consecutive year in 2024. [[4]]
