UOB Kay Hian Private Limited
Date of Report: Friday, 15 August 2025

ComfortDelGro Delivers Steady Growth: Robust Acquisitions and Yield Shine in 2Q25 Results

Overview: Strong 2Q25 Results Driven by Acquisitions and Contract Wins

ComfortDelGro Corporation, a major player in land transportation services, posted a resilient 2Q25 performance, underscoring its ability to deliver earnings growth and attractive dividends. The company maintained its BUY rating with a slightly trimmed target price of S\$1.70, reflecting confidence in future upside, robust acquisition contributions, and a compelling dividend yield of 5.5%.

Key Financial Highlights: Growth Across Revenue and Profitability Metrics

• Share Price: S\$1.53
• Target Price: S\$1.70 (Previous: S\$1.71)
• Upside Potential: +11.1%
• Market Cap: S\$3,315.1m
• Dividend Yield: 5.5% (2025F)
• PE (2025F): 16x (five-year average)
• 1H25 Core PATMI: S\$99m (+7% YoY)
• 1H25 Revenue: S\$2,422.7m (+14.4% YoY)
• Interim Dividend: Raised 11% YoY to 3.91 S cents/share (80% payout ratio)
• Overseas Revenue Contribution: 54% (up from 46% in 1H24)
• Overseas Operating Profit Contribution: 40% (up from 29% in 1H24)

Segmental Performance: Detailed Breakdown

Public Transport: UK Contracts Fuel Margin Expansion

• 1H25 revenue rose 4% YoY; core operating profit surged 30% YoY.
• Core operating margin climbed to 4.5% (+0.9ppt YoY).
• Key drivers: UK bus contract renewals at higher margins, launch of four Manchester bus franchises in Jan 25, and Singapore rail fare hikes.
• 2Q25 margin dipped 0.5ppt QoQ to 4.3%, attributed to contract timing, expected to normalize in coming quarters.

Taxi & Private Hire Vehicles: Acquisitions Power Growth, but Competition Bites

• 1H25 revenue soared 59% YoY; core operating profit up 21% YoY.
• Full contributions from Addison Lee and A2B (acquired in 2024).
• 2Q25: Addison Lee’s operating profit fell 11% QoQ to S\$6.4m; A2B stable at S\$2.9m amid stiff competition.
• UK and Australia B2B premium segments performed strongly.
• Singapore P2P market contracted due to ride-hailing competition; China demand subdued by economic uncertainty.

Other Private Transport: CMAC Acquisition Drives Exceptional Growth

• 2Q25 revenue up 11% YoY; core operating profit up 48% YoY.
• 1H25 revenue rose 24% YoY; core operating profit more than tripled.
• Main catalyst: Full half-year contribution from CMAC (acquired Feb 24), plus higher volumes in Singapore private bus and Australia Non-Emergency Patient Transport.

Inspection & Testing Services: ERP 2.0 Rollout Spurs Revenue

• Core operating profit up 17% YoY (1Q25) and 13% YoY (1H25).
• Revenue up 29% YoY (1Q25), 25% YoY (1H25), driven by increased On-Board Unit installations for the ERP 2.0 system.

Comprehensive Financial Table: Key Metrics at a Glance

Dividend Policy: Attractive Yield and Consistent Payout

• Interim dividend raised by 11% to 3.91 S cents/share, reflecting higher earnings.
• Maintains a robust 80% payout ratio.
• Annualized yield stands at approximately 5.5%, ensuring steady returns for investors.

Operational Outlook: Positive 2H25 Trajectory and Segmental Drivers

The outlook for the second half of 2025 is optimistic, with several factors expected to propel further growth:

• Public Transport: Singapore rail revenues set to climb on steady ridership. Results of the Tampines bus package renewal are awaited. UK bus contract renewals should enhance margin profiles, with the Victoria bus contract (commenced July 2025) estimated to contribute S\$2.9m operating profit for 2025. Stockholm E40 metro (45% JV stake) starts in Nov 2025, expected to add S\$1m-2m in operating profit.
• Other Private Transport: UK/EU revenue to be boosted by CMAC during the peak travel season, with 3Q typically contributing 50% of full-year results. 2H24 saw S\$13m in operating profit from this segment.
• Inspection & Testing: Revenue remains elevated from ongoing ERP 2.0 On-Board Unit installations.

Earnings Revisions and Risks

• 2025-2027 core PATMI forecasts are revised lower by 6-7% due to softer-than-expected UK operating margins.
• New forecasts: S\$212m (2025), S\$239m (2026), S\$260m (2027) versus previous S\$228m, S\$256m, S\$277m.

Valuation and Recommendation

• BUY maintained with a trimmed target price of S\$1.70, pegged to 16x 2025F PE (five-year average long-term PE).
• Upside potential reinforced by solid taxi earnings and improved UK bus margins from contract renewals.

Potential Share Price Catalysts

• Winning bus tender contracts.
• Increased taxi commission rates.
• Earnings-accretive overseas acquisitions.

Profit & Loss, Balance Sheet, and Cash Flow Summary

Summary: ComfortDelGro’s Investment Thesis Remains Solid

ComfortDelGro continues to demonstrate operational resilience and earnings momentum. Strategic acquisitions, successful UK contract renewals, and solid dividend policies underpin its investment proposition. With further upside possible from contract wins, higher taxi commissions, and additional accretive acquisitions, ComfortDelGro remains an attractive pick for investors seeking both growth and yield in the transportation sector.

About UOB Kay Hian

UOB Kay Hian Private Limited, a leading regional broker, has conducted this comprehensive analysis as of 15 August 2025.