Comfort Delgro

Comfort Delgro: 2Q11 results were in-line with expectations.
Rev at $843m, +6.8% yoy and +5% qoq, while Net Profit at $59.9m, +2.9% yoy and +19.5% qoq. Operating margins dipped slightly at 12.2% vs 12.5% yoy.

Rev led by grp’s bus business, accounting for 37% of increase in Grp’s rev, followed by taxi business at 31%. Automotive and engineering business, rail business, vehicle inspection and testing, bus station and car rental and leasing business accounted for remaining 32%.

Bus division saw rev +4.9% as growth from operations in Aus, SG and UK was offset by a decline in China. Rev from overseas bus operations continued to account for bulk of Group bus rev, at 63.1%. For Taxi division, rev +7.1%, led by SG where rev +8.3% due to a larger operating fleet and increase in cashless transactions. In UK, taxi rev -6% due to translation effect of weaker Pound. In China, rev from axi business unchanged and in Vietnam, rev +6.7% to $1.6m.

Going forward, grp remains confident of prospects and has declared an interim div of 2.7c/share, a 51.3% of distributable profit for 1H11. Balance sheet remains strong, with net gearing at a low 10.4%. At current price, grp trades at 12x FY11E P/E, with estimated div yield at 4.2%. BNP Paribas maintains Buy Call with $1.68 TP, Deutsche maintains Buy with $1.70 TP and Citi maintains Neutral with $1.51 TP.