Brokers' take

ComfortDelGro | Buy

Target price: S$3.40

Feb 15 close: S$2.87

OCBC Investment Research, Feb 15

ComfortDelGro (CDG) ended FY2015 steadily, as FY2015 revenue grew 1.5 per cent to S$4.11 billion, driven mainly by bus, rail, and taxi segments, but partially offset by automotive engineering services segment on lower prices for the sale of diesel to taxi hirers. We expect the launch of revenue service of Downtown Line 2 (DTL2) to drive revenue growth and offset start-up as well as operating costs. We also expect CDG to see more material benefits from lower fuel and electricity costs in FY2016 as management guided for lower and more favourable hedging positions for the year. Finally, we still expect bus divestment to occur in H2 2016 as part of the transition to government contracting model, and believe LTA will purchase CDG's bus assets at net book value.

Singtel | Buy

Target price: S$4.40

Feb 15 close: S$3.74

Maybank-Kim Eng Research, Feb 14

Singtel reported resilient Q3 results, in line with expectations. Despite a weaker Australian dollar, economic headwinds and losses from newly acquired Trustwave, revenue, Ebitda and core net profit were maintained. It achieved this by investing in higher-growth markets to drive growth (for example, 4G network in Australia) and cutting costs where necessary (mainly in the Singapore consumer business). Full-year guidance was maintained. Consistent earnings and an approximate 5 per cent dividend yield offer a safe-haven refuge.

SATS Ltd | Hold

Target price: S$3.98

Feb 15 close: S$3.80

CIMB Research, Feb 12

Q3 2016 net profit of S$60 million was in line with our expectations. Steady Ebit (earnings before interest and tax) margin of 14 per cent, still from the deconsolidation of food distribution. Without the effects of cost deconsolidation in FY2017-18, its organic growth is tepid with the risk of deterioration if global travel sentiment is affected by a recession. We would watch out for signs of cracks if operating statistics from gateway services start to deteriorate. SATS was trading at about 10 times forward P/E (price-to-earnings) during the GFC. For now, SATS is still a keeper on its strong net cash and earnings growth, relative to other sectors.

Compiled by Jamie Lee

Disclaimer: All analyses, recommendations and other information herein are published for general information. Readers should not rely solely on the information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

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