Compiled by Navin Sregantan
COMFORTDELGRO | HOLD (MAINTAINED)
APRIL 16 CLOSE: $2.61
FAIR VALUE: $2.63
OCBC Investment Research, April 16
As of April 15, the share price of SBS Transit is up 55.9 per cent on the year, aided by earnings growth with contributions from the Seletar and Bukit Merah Bus Packages which commenced operations from March and November last year, respectively.
ComfortDelGro owns about 74.5 per cent of SBS Transit.
We estimate that SBS accounts for about 20 per cent of ComfortDelGro's net profit, as ComfortDelGro also has the taxi business and Vicom-related business in its Singapore operations, which collectively accounted for 59 per cent of revenue in FY 2018.
Overseas operations accounted for the remaining 41 per cent.
Looking ahead, there are expectations that a new regulatory framework for the P2P transport sector will be established.
Compared with six months ago, Singapore's taxi fleet as of February is down 5.2 per cent versus August last year, while the number of private hire cars is up about 1 per cent.
Meanwhile, we fine-tune our estimates and with the improved market sentiment, our discounted cash-flow-based fair value is raised to $2.63.
SINGAPORE AIRLINES | HOLD (MAINTAINED)
APRIL 16 CLOSE: $9.85
TARGET PRICE: $10.10
UOB Kay Hian, April 16
Singapore Airlines' (SIA) pax carriage rose 7.8 per cent year on year (yoy) in Q4 FY2018, indicating strong underlying demand.
SIA indicated that the 1.9 per cent decline in SilkAir's capacity was due to B737 Max's temporary withdrawal.
Cargo traffic declined yoy for seven straight months, while load factor fell yoy for five consecutive months.
Six of SilkAir's B737 Max aircraft have been grounded since mid-March, accounting for 20 per cent of its current seat capacity.
SIA has also grounded two B787-10 jets due to wear and tear on engine blades.
We now believe that B737 Max aircraft is likely to remain grounded beyond our initial July estimate.
While we believe SIA will be compensated for loss of revenue for the B737 Max grounding, we still believe there is downside risk to revenue, profits and cash flow.
SIA also faces downward risk to profits due to the rise in jet fuel costs.
Suggested entry level is at $9.
Disclaimer: All analyses, recommendations and other information herein are published for general information. Readers should not rely solely on the information published and should seek independent financial advice prior to making any investment decision.
The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.