CDG

CDG: 2Q14 results in lin. Net profit rose 9.9% y/y to $75m, while revenue rose 11.9% to $1b, with growth from all business segments. Bus revenue rose 18.4% to $517.2m from UK and Singapore, offset by Australia and China. Taxi business rose 6.7% to $320.1m, with growth from all countries except Australia. Meanwhile, rail business saw a 20.8% increase at $48.8m with the opening of Downtown Line 1. Growth is expected to come from SG/UK bus, SG/CN taxi and rail (DTL 1 operations). Nevertheless, the core SG bus business and DTL 1 are still lossmaking. The recent acquisition of Blue Mountains Bus Company is expected to be earnings accretive from 4Q14, negating some weakness in the bus business in New South Wales. While a strong set of results reflects solid fundamentals of the company, the 30% ytd rally has more than priced in rosy outlook, in Maybank-KE’s view. CDG is trading at 19.5x FY14e P/E. Interim dividend of 3.75¢ declared (FY13: 3¢) Latest broker ratings: Maybank-KE downgrades to Hold with TP $2.50 Deutsche maintains Buy with TP $2.85 CIMB maintains Add with increased TP of $2.88 from $2.59