ComfortDelgro

ComfortDelgro: Alpine Bau, a key contractor for Downtown line 2 (DTL2), filed for insolvency after failed attempts to restructure the company’s debt. The LTA which oversees the construction of transportation infrastructure has stated that a delay of 3-6 months can be expected. CS expect the impact on ComfortDelgro’s (CD) earnings to be minimal given that DTL2 will start to contribute to group earnings only in 2016. In addition, rail will likely make up only c.4% of the group’s operating profits for 2015E. No material change in earnings growth outlook for CD as its TP is based on 16x FY14E P/E. CS believe an improved earnings profile of the company justifies a P/E multiple closer to what prevailed in its higher growth period prior to 2007 (versus a 15x ten-year average). Sustainably strong dividend yields of 3.7-4.0% should also provide support to CD’s stock price. CS maintains OUTPERFORM with TP of $2.10.