Brokers' take

Singapore land transport | Overweight

RHB Research, Dec 1

WHILE we were positive on the positive outlook for earnings from Singapore's bus business, we are now increasingly confident that the incumbent bus operators could witness cash inflow from the sale of bus assets back to the government. We have incorporated the sale of bus assets at 10 per cent discount to the government for an upfront cash payment. While Singapore's taxi operators have experienced intense competition from private car hire companies over the last year, we expect the competitive intensity to fade as the private car hire apps are brought under the regulatory purview by the government during the next one year. We are upgrading ComfortDelGro to "buy" (from "neutral") and increase our discounted cash flow-based (DCF) target price to S$3.60 (from S$2.86). We upgrade SMRT to "neutral" (from "sell") and increase our DCF-based target price to S$1.60 (from S$1.10). As the land transport sector now offers a market cap weighted upside of 19 per cent, we are upgrading the sector to "overweight" (from "neutral").