RHB Group Research's Shekhar Jaiswal has maintained his “buy” rating on ComfortDelGro (CDG) with an unchanged target price of $1.70 despite expecting a “near-term weakness” in share price.
This was amid what he called “earnings headwinds” from the announced lockdown in the UK.
However, Jasiwal said with strong control on Covid-19 and continued Government support from extensions to the Jobs Support Scheme (JSS) and Point-to-Point Support Package to early 2021, CDG’s public transport and taxi businesses in Singapore should see q-o-q improvements.
He remains confident of its profit recovery in 2021 and believes current valuations remain compelling.
Furthermore, implementation of a regulatory framework for the point-to-point transport sector should level the playing field among taxi operators and private-hire operators and help arrest the ongoing decline in CDG’s taxi fleet.
Jasiwal also believes that with the cautious approach that the Government has taken towards re-opening of the economy, Singapore should be able to avoid the re-emergence of COVID-19.
Overseas, on a y-o-y basis, he expects CDG’s overseas business to see some improvement as well in 2021. He said “From a low base of 2020, we expect CDG to report more than 150% earnings growth in 2021.”
As at 3.05 pm, shares of CDG were trading at $1.43, with an FY20 price to book ratio of 1.2 and dividend yield of 2%
