ComfortDelgro: Deutsche Bank has cut earnings forecasts for 2015 to 2018 by 12% to 18%. The forecast revision is mainly due to increase in wage inflation, accounting for latest FX rates for overseas operations, and adjusting overly optimistic management estimates on automotive engineering segment.
However the house believes that growth momentum remains strong, driven by on-going bus reforms lifting earnings margin, potential breakeven for Downtown Line by 2016, energy savings from lower fuel prices, taxi fleet and ridership increases as well as a gross fare hike since April 2015.
The house cuts its TP by 4.3% to $3.33 but maintains a Buy call given the positive growth fundamentals.
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