CIMB upgrades the counter to Add from Hold and adjusts its TP upwards to $3.27 from $3.17 as it believes the idle risks of its taxi business has subsided with its taxi hire-out at close to 100%. With the high cost of car ownership and the government's strict control on car population growth, Singapore's taxi market could very well be the best in the world with CDG being the dominant player (60% market share).
Rail operations: Expected to benefit from its enlarged rail network with the commencement of DTL stage 2 and 3 operations. Overall, the DTL is expected to turnaround by FY17 when stage 3 commences operations.
Bus operations: A smooth transition to the government contracting model should provide for improved bus margins post reform.
Overall, the house continues to prefer CDG as its investment proxy to the land transport sector in Singapore due to:
1. well-diversified businesses
2. strong balance sheet
3. overseas growth initiatives
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