ComfortDelGro Corporation: Acquisition-Fueled Growth
ComfortDelGro Corporation (CD SP) has showcased a remarkable trajectory with its 9M24 results surpassing expectations. The company reported a 15.4% and 19% year-on-year increase in revenue and operating profit (OP), respectively. This growth is primarily driven by its strategic acquisition of Addison Lee, a UK-based private ground transport company, aiming to scale its taxi and private hire business while broadening its customer base. The acquisition, completed on 7 Nov 2024, adds 7,500 drivers and 5,000 vehicles to ComfortDelGro’s fleet.
The public transport segment performed robustly with a 5.2% and 20.5% quarter-on-quarter increase in revenue and OP, respectively, bolstered by improved OP margins from public bus contract renewals in the UK. Meanwhile, the Taxi & Private Hire segment experienced some softness due to competition, although revenue saw a slight quarterly increase. ComfortDelGro’s balance sheet remains healthy, and the acquisition is deemed accretive, prompting a fair value estimate revision from SGD1.55 to SGD1.67.
On the ESG front, ComfortDelGro has shown improvement, particularly in Governance, although it still lags in Labour Management, Carbon Emissions, and Health and Safety. However, its strong governance structures and ethical policies position it favorably against industry peers. The recommendation for ComfortDelGro is a BUY.
Boustead Singapore: Resilience Amidst Challenges
Boustead Singapore (BOCS SP) delivered a strong bottom line despite a challenging global environment. The company’s 1HFY25 results revealed a 20% year-on-year decline in revenue due to a lower order backlog, but PATMI surged by 34% thanks to margin expansion and the reversal of impairment loss. The Geospatial Division stood out with a 4% year-on-year revenue increase, supported by a record deferred services backlog.
The Energy Engineering and Real Estate Solutions divisions faced revenue contractions due to a significantly lower order backlog. Despite securing around SGD96m in new contracts, the engineering order backlog has decreased. Boustead’s commitment to environmental stewardship is evident in its eco-sustainable solutions, contributing positively to the environment. The fair value estimate for Boustead has been adjusted to SGD1.39, and the recommendation is a BUY.
JD.com: A Key Beneficiary of Consumer Goods Subsidies
JD.com (9618 HK / JD US) is emerging as a key beneficiary of China’s consumer goods subsidies program. The company’s 3Q24 results were in line with market expectations, with a 5.1% year-on-year revenue growth driven by high single-digit growth in total gross merchandise value. The electronics and home appliances categories rebounded, supported by a consumer goods trade-in program, while gross profit margins reached a record high of 17.3%.
JD.com is committed to shareholder returns, with a recent USD5b share buyback plan following the full utilization of a previous plan. The company is also increasing its margin guidance, thanks to its leading retailer scale and unique 1P online direct sales model. The fair value estimate for JD.com is HKD210 (9618 HK) / USD54 (JD US), with a recommendation to BUY.
HSBC: Strategic Reorganization and Financial Resilience
HSBC (5 HK / HSBA LN) has fine-tuned its estimates following solid 3Q24 results, driven by robust non-banking net interest income (NII). The bank’s new organizational structure, effective January 2025, aims to strengthen strategic focus and simplify operations, realigning along four key business lines. HSBC’s strong revenue momentum and capital position are expected to support share price performance, despite slightly higher provisions.
The bank leads its industry peers in ESG integration into lending, although it faces criticism over alleged funding of fossil fuel projects. HSBC’s commitment to consumer financial protection and data security is notable, and the bank’s fair value estimate is HKD86.00 (5 HK) / GBp867.18 (HSBA LN), with a recommendation to BUY.
