Analyst of CGS-CIMB reiterated a Buy rating on Comfortdelgro, with a price target of S$1.70.
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CGS-CIMB’s rating is based on several strategic factors that bolster Comfortdelgro’s market position and financial outlook. The acquisition of the remaining stake in CityCab is a significant move, allowing Comfortdelgro to fully integrate its operations and enhance synergies within its taxi business. This acquisition is expected to be earnings accretive, contributing approximately 1.7% to the company’s earnings, and it strengthens the group’s core point-to-point business in Singapore.
Additionally, Comfortdelgro’s financial health remains robust, with a manageable increase in net gearing from 19% to 22% post-acquisition. The company’s valuation is deemed fair, trading at a P/E ratio comparable to its industry peers. The potential for strong overseas contributions and global tender opportunities, particularly in the UK and Australia, further supports the Buy rating. Despite potential risks such as acquisition integration challenges, the company’s solid dividend yield and strategic positioning in the mobility market underpin the positive outlook.
In another report released on September 2, DBS also maintained a Buy rating on the stock with a S$1.80 price target.