ComfortDelgro

ComfortDelgro: After a non-deal roadshow in Tokyo, Nomura notes the main topics are the group's outlook in its Singapore operations, M&A and its growth strategy. Nomura maintains its BUY rating with TP of $2.19. On the Singapore operations, the management believes the Singapore bus business will turn for the better on the premise that the government could potentially shift towards a cost-plus model, eliminating revenue risk. The taxi segment has the potential of rental rates improvement on its fleet with the new Hyundai i40 launch in 2H13 and a potential in market share increase with the exit of smaller players. The group's rail network will double its capacity through the Downtown Line and will help the group gain creditibility into rail operations overseas. On M&A, the group currently has a target to achieve 50–60% of its operating profits from overseas in 3–5 years. They seek to achieve IRR of 12–15%, non-dilutive margins and management control. Their preference lies in the taxi and bus segments and in markets such as China, UK and Australia where they see a strong commitment by governments to invest in infrastructure. Management believes that the key growth drivers going forward are 1) M&A, 2) commencement of Downtown Line and 3) a potential change to a cost-plus model for the Singapore bus segment.