After releasing its Q2 2023 earnings last week, Singapore-based transport company ComfortDelGro Corporation Limited (SG:C52) was able to secure a positive outlook from analysts. They are bullish on the overall recovery of the company’s operations and expect further momentum driven by electric and autonomous vehicles.
ComfortDelGro is a global transportation company boasting a comprehensive fleet comprising buses, taxis, and diverse rental vehicles. The company’s operational footprint extends across seven countries on an international scale.
Q2 2023 Earnings and Outlook
Last week, the company announced its Q2 and half-year earnings for 2023. The numbers showcased a narrative of strength and flexibility in the midst of a challenging business landscape. In Q2, the company’s PATMI (profit after tax and minority interest) grew by 16.6% on a year-over-year basis and by 39.3% as compared to the previous quarter.
The earnings were driven by the company’s public transport segment and improved margins in its taxi segment. The company’s operating profit increased by over 100% to S$26 million.
Moving forward, the company has introduced a platform fee of S$0.70 for bookings made through its Zig app. The company is expecting this move to boost its revenue by around S$11 million in the second half. Additionally, its UK business is expected to post positive earnings in the remaining year, boosted by new and renewed contracts at higher fees.
The company also modified its dividend policy, now pledging to distribute a minimum of 70% of PATMI, which is an increase from the previous 50%.
What Are Analysts Predicting?
Following the earnings announcement, analysts are upbeat on the stock, backed by many tailwinds such as dividend growth, upward momentum in earnings, and a solid balance sheet.
Five days ago, UOB Kay Hian analyst Llelleythan Tan confirmed his Buy rating on the stock, predicting an upside of 18.6% in the share price. Tan believes the company’s recovery is strong and its rail ridership will surpass 2019 levels in the third quarter of 2023. Also, the completed removal of COVID-19 restrictions will drive point-to-point (P2P) trips in Q3.
Four days ago, Paul Chew from Phillip Securities also recommended buying the stock with a forecast of 21.7% growth in the share price.
On the same day, Macquarie analyst Foo Zhi Wei reiterated Hold rating on the stock and predicted a downside of around 4%.
Is ComfortDelGro a Good Investment?
According to TipRanks, C52 stock has a Strong Buy rating based on five Buy and one Hold recommendations. The C52 price forecast is S$1.42, which shows an upside of 10.4% on the current price level.
Conclusion
Analysts are optimistic about the company’s future prospects, envisioning a steady revival in earnings and predicting a surge in the share price.
