Comfort Delgro

Comfort Delgro: strong set of 3Q results in line with expectations, with record revenue at $823.4m, +5.2%YoY and +4.3%QoQ, while Net Profit at $61.4m, +10.4%YoY and +5.5%QoQ. Rev growth would have been +7.9%, if not for negative translation effect of the weaker Pound, Rmb and Vietnamese Dong....

Rev growth driven mainly by Singapore bus (+10%) and rail (+13%), which benefited from surging ridership (+6% and 20% YoY, respectively) brought on by the strong economy and booming tourism scene. Taxis (+13%) had the advantage of a larger fleet, higher usage of credit transactions…

Overseas, Australia bus (+24%) continued to be the biggest outperformer due to more services in New South Wales and Victoria, and the strong A$. While the UK continued to be plaqued by the weak pound, taxi operations appeared to be starting to turn the corner with management reporting higher QoQ call volume….

Going forward, grp remains positive on outlook, but will remain vigilant and continue to focus on demand patterns of customers. Expenses will continue to be tightly controlled even as fuel and electricity pose challenges....

Result brings 9M10 Rev to $2.4b, +5.4%YoY and Net Profit to $173.9m, +5.1%YoY. At current levels, grp trades at undemanding valuations, with annualized FY10E P/E at 13.1x vs grp’s average of 15.3x and SMRT of 19x FY11E MarP/E. Kim Eng and DMG maintains buy with $1.87 & $1.85 TP respectively. Technically, $1.45 support, not breached since Jul, may hold, while resistance at $1.49 (30day MA).