In a report released today, from CGS International reiterated a Buy rating on Comfortdelgro, with a price target of S$1.70.
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CGS-CIMB has given his Buy rating due to a combination of factors, chiefly that ComfortDelGro has significantly reduced its vulnerability to fuel price spikes versus the 2021–22 period by locking in stronger margins and embedding fuel and electricity costs in indexed operating contracts across its core bus and rail operations. These mechanisms, together with pre-planned cost allowances, mean most fuel-related cost inflation can be recovered, limiting direct earnings downside even in a high-oil environment.
In the near term, at least half of fuel needs are hedged for up to a year, while recent fare and surcharge adjustments, plus targeted support for taxi drivers, further buffer profitability as demand trends remain broadly intact. CGS-CIMB also highlights an attractive forecast dividend yield of about 6% and sees upside from potential earnings improvement in the U.K. and new contract wins, while noting that key risks include prolonged geopolitical conflict, softer discretionary travel demand, and execution challenges on acquisitions and margins.