SG Land Transport

SG Land Transport: JP Morgan has sector report. Note that domestic operations remain challenging. Fuel cost a key swing factor, accounts for c.9% and c.15% of
ComfortDelgro’s and SMRT’s total opex respectively. Estimate that a 5% increase in fuel costs will negatively impact ComfortDelgro’s and SMRT’s net income by 2.3% and 3.3% respectively…..

Outcome of the DTL tender is expected in late 3Q/4Q, and ComfortDelgro’s subsidiary, SBS Transit, remains as preferred pick. House have ComfortDelgro at O/w, TP $1.80, tipping SG taxi and Aus operations to mitigate Challenges. Maintain netural on SMRT with $1.95 TP, note of limited share price upside but well supported by div yield of 4.4%, trim FY12E/FY13E net profit estimates by 3%/5.6%.