Comfort Delgro

Comfort Delgro: Citi downgrades to non-consensus Sell (from Buy), lowers TP to 41.63 from $1.64. Believes Comfort will nonetheless bear earnings pressure from a legacy review and possible overhaul of Spore’s land transport sector, evident in the faltering profits of peer SMRT, as the changes will prioritize public service quality over sh/h returns. Notes separately that Comfort’s UK and China businesses (23% of EBIT) may slow in line with their respective GDPs. After Comfort’s 17% rally, outperformance over STI by 5% and SMRT by 27%, the house recommends taking profit ahead of Comfort’s 2Q12 results, due 13 Aug. Predicts 2Q12 net profit of $66m, +23% qoq, on an expected seasonal lift from the traditionally weak 1Q, a growing Spore taxi fleet and continued strength in Australian earnings.