Comfort Delgro: IIFL reiterate Add call and $1.48 TP. Note that DTL adds to near-term cost Pressure, as 75%-owned subsidiary, SBS Transit was recently awarded a 19-year licence to operate Downtown Line, operational in late-2013.
Positive on grp’s award of the project in the long term and expect DTL to turn profitable in 2018, but believe that the payment of a fixed licence fee will contribute towards start-up operating losses. House reduce 2013 earnings estimates by 4% and expect CD’s margins to remain flat at best over 2010-13, owing to limited pricing power, cost inflation and unfavourable currency movements. However, the >4% div yield should support stock price.