Comfort Delgro: Deutsche maintains Buy with TP$1.70. Co is of view that the Downtown Line (DTL) is a critical milestone for co’s rail operations and compares the expected ridership no of 700k to NEL’s 420k. The DTL will add over 14k sqm of commercial space more than 4 times that of NEL which is expected to boost rev and profitability further.
House estimates that DTL would lift rev by approx 5% when fully operational as well as strengthen its positioning for future rail tenders. Mgmt has indicated that DTL’s breakeven could take longer than NEL’s 3 yrs and depress margins. However, asset-light model is viewed favourably which reduces co’s capex burden.
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