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OCBC COMFORTDELGRO CORPORATION LIMITED | BUY FACTORING IN WEAKER TAXI EARNINGS OUTLOOK - Falling taxi ridership - Expect resilient earnings but growth to slow - Maintain BUY on lower FV
Against the backdrop of a surge in rental car population, LTA data showed 19 consecutive months of decline in average daily number of taxi trips made by one-shift taxis. We believe the reason is likely due to the expansion of Grab and Uber, and as a result, we expect ComfortDelGro’s (CDG) taxi earnings growth ahead to slow or remain flat as CDG: 1) slows down taxi fleet growth to prevent idling fleet. That said, we think the current incentives offered by Uber and Grab to boost their drivers’ income are unsustainable over the long-run. In our view, driving a traditional taxi full-time will continue to generate more stable and higher monthly income compared to driving for Uber/Grab (lower or without incentives). Hence, we think an exodus of CDG’s existing taxi hirers is an unlikely scenario, and expect its taxi earnings to remain resilient as long as management continues to focus on ensuring high (>90%) hired-out rate of its taxi fleet. As we factor for slower to flattish taxi earnings outlook, our DCF-derived FV decreases from S$3.21 to S$3.10. Maintain BUY. |
UOB Kayhian Singapore Post (SPOST SP) Noise Fades, Value Remains; Upgrade To BUY Since the unfolding of corporate governance issues in Dec 15 and management changes, SPOST’s share price has retreated almost 30% from its peak in early-15. While some decline is warranted, we believe the market has not priced in its growth assets in e-commerce and logistics. We changed our valuation methodology from DCF to SOTP to better reflect the valuation of each business segment. Upgrade to BUY with a higher SOTP target price of S$1.77 (previously S$1.53).
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Credit Suisse
Top picks: CDL is our top pick among the developers and is on the CS AxJ Focus List. We think CDL is best positioned to benefit from a residential market turnaround, and expect further asset monetisations, |
DBS Vickers Valuations getting richer; stick to stock picking. The sector has re-rated upwards on the back of improving sentiment; and, valuations have moved up to +1.2SD above historical average. Our stock picks from our last issue have performed well, averaging a total return of c.32%. We continue to advocate a stock picking strategy, sticking to names that have potential to continue to deliver strong growth or those which could potentially see upside surprises. We retain Sheng Siong given its potential upside margin surprise, CPALL for its strong growth profile and OldTown for potential upside surprise to earnings. We still like Indofood Sukses Makmur given its decent valuation, growth, and potential for its sum-of-parts discount to narrow with the divestment plan of China Minzhong. We add back THBEV after its recent correction, and project growth to remain robust. |
