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Hot stock: ComfortDelGro up 2.8% after announced major reinvestment in public transport
SINGAPORE transport operator ComfortDelGro on Tuesday surged 2.77 per cent in early trading to S$2.97, up eight cents.
This followed Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam's announcement in his Budget statement on Monday that the government plans to make a major reinvestment in Singapore's infrastructure - including vast improvements in public transport - to meet Singapore's future economic and social needs.
"These major investments in Singapore's future will mean significantly higher development expenditures. Our development expenditures have already increased from S$12 billion five years ago to about S$20 billion (4.8 per cent of GDP) in the coming fiscal year.
"They will grow further, by 50 per cent to about S$30 billion (6 per cent of GDP) by the end of this decade," he said.
ComfortDelGro's peers, SBS Transit and SMRT, were both up 1.65 per cent and 1.74 per cent at S$1.845 and S$1.755, respectively.
Earlier this month, ComfortDelGro posted a 7.7 per cent increase in net earnings to S$283.5 million for the year ended Dec 31, 2014. The record profit was on the back of an 8.1 per cent rise in revenue to S$4.05 billion, which breached the S$4 billion mark for the first time.
OCBC, in a report, said it believes ComfortDelGro will continue to see strong growth, as its management has guided for revenue from its bus, rail and taxi segments to increase going forward.
"ComfortDelGro has been our top pick since Dec 2014 with a buy rating, which had been spot on thus far. While we still like ComfortDelGro for its diversified revenue base and growth prospects, we think the recent bullish run in its share price is overdone," it said, downgrading it to hold, at a higher fair value of S$3.07.