COMFORTDELGRO: Labeled ‘Rare Laggard’ With Upside by Maybank Kim Eng

THE CONTEXT

• With much of the recent Singapore market rally focused on small- mid-caps, ComfortDelGro was overlooked -- until last Friday when Maybank Kim Eng's report sent it higher by 10 cents (+6.5%) to $1.64.

Yes, it doesn't fit the profile of a small- or mid-cap as it has a sizeable market cap of $3.2 billion.

Research house	Call	Target price for CD
DBS Research	Buy	$1.80
OCBC Investment Research	Buy	$1.71
Maybank	Buy	$1.70

• Still, it's worth noting its strong fundamentals, according to the report, which expects 2QFY25 earnings growth (20% q-o-q) and an interim dividend with an 80% payout ratio.

That's decent and should catch the eye of serious investors.

• ComfortDelGro has operations in public transport and taxis across Singapore, Australia, UK/Ireland and China.

While Singapore is its home base and largest operation, other countries such as Australia have seen ComfortDelGro operate public transport as the above graphic shows.

• Singapore is the largest EBIT contributor at 73% followed by Australia at 18%, China at 7% and UK/Ireland at 2%, according to the report.

• Read more below....

Excerpts from Maybank Kim Eng report

Analyst: Eric ONG

Massive laggard – retain BUY with higher TP

Notwithstanding the recent super-charged market rally, CD remains one of the rare laggards even though the group continues to deliver respectable earnings growth and a decent yield of almost 6%.

COMFORTDELGRO
Share price: $1.64	Target: $1.70

While traditionally seen as a low-beta stock, we reckon this could change soon as CD is supposedly one of the prime candidates to benefit from the deployment of the MAS SGD5bn fund, which focuses on non-index STI stocks and other small-mid caps companies.

We maintain BUY with higher DCF-based TP of SGD1.70 to reflect lower WACC given its more optimal capital structure.

buses

Aside from buses, ComfortDelgro also operates train services. In Singapore, SBS Transit, a 74.4% subsidiary of ComfortDelGro, operates the North-East MRT Line and the Downtown Line. Photo: Company

Autonomous vehicles may be on the way soon

On 16 Jul’25, CD has launched training and capabilities development initiatives to upskill existing drivers.

This will help to prepare the group for the future of mobility, as the industry evolves and embraces autonomous vehicles (AVs) to deal with persistent driver shortages.

In fact, CD earlier launched its first two-year robotaxi pilot programme in Guangzhou, in partnership with Pony.ai, an autonomous driving technology company.

This will enable it to develop and refine capabilities for AV technology operations and fleet management, with the goal of future large-scale deployment in China and other international markets.

To impose new taxi cancellation and waiting fees

Separately, CD is looking to introduce new cancellation and waiting fee policies in Singapore from 31 Jul.

To help drivers and passengers get familiar with the changes, there will be a "waiver period" and customers will only be charged cancellation fees from 1 Sep and the waiting fee from 15 Oct.

That said, we think the move should not make CD less competitive in the market as this is generally in line with prevailing industry practices and other ride-hailing companies such as Grab also have similar charges.

Expect sequential earnings growth in 2Q

EricOng Eric Ong, analystCD will report 2Q25 results on 13 Aug 2025 and we expect core PATMI of about SGD58m (+10% YoY, +20% QoQ), driven by contributions from acquisition of CMAC, A2B and Addison Lee, continued EBIT margin improvement for UK bus contract renewals, as well as commencement of UK Metroline Manchester contract from Jan 2025.

We also expect the group to declare an interim DPS of about 3.9 SG cents, representing a high payout ratio of 80%.

Full report here

COMFORTDELGRO: Labeled ‘Rare Laggard’ With Upside by Maybank Kim Eng

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