Comfort Delgro

Comfort Delgro: 1Q12 results inline. Revenue was 7% higher yoy at $855m, as strong growth in Spore taxi, China taxi and Australia b(bus and taxi) offsest relatively weaker performance in UK, China bus and Vietnam. Comfort managed to achieve a 7% higher operating profit yoy despite pressures on staff and fuel cost. Net profit also grew 7% yoy to $54m. Going forward, mgt expects Spore and Australia to remain the key growth drivers, but UK revenue to decline on FX and weak economic conditions (thereby softening the Olympics story). On costs, Comfort expects to add ~50 Downtown Line headcount over FY12. It sees higher energy costs, though 40% of FY12 fuel and 20% of electricity requirements are currently hedged. Deutsche says valuations attractive at 11.9x fwd P/E, close to -1std dev from its 5yr historical avg P/E. Maintains Buy with TP $1.70. Maybank Kim Eng reiterates Buy with TP $1.85.