Comfort Delgro / SBS Transit: Awarded tender for Downtown Line for licence charge of $1.6b over a 19 yr period. LTA will retain ownership for all assets and will pay for asset replacement while co will pay for operations, maintenance and insurance. LTA will hand over operations in 3 phases in 2013, 2015 and 2017. Ridership nos are expected to be approx over 700k with 34 stations and approx 14k sqm.
Comfort Delgro owns over 75% of SBS Transit and is a more liquid proxy to SBS. Comfort Delgro trades at 12.4x current P/E and SBS at 12.1x. Peer SMRT now trades at 17.2x current P/E. Barclays has lowered Comfort’s TP from $1.60 to $1.54 and expects no meaningful contribution for Comfort till 2015.
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