Compiled by Navin Sregantan
COMFORTDELGRO | HOLD (DOWNGRADED)
MAY 15 CLOSE: $2.52
TARGET PRICE: $2.59
DBS Equity Research, May 15
ComfortDelGro's share price has done well in the year-to-date period, but we see limited upside at this juncture.
Earnings growth remains, as seen in Q1, in line with our earlier thesis.
We are projecting earnings growth of 4 per cent/3 per cent in FY2019/ FY2020, and do not envisage major earnings upgrade to justify a further re-rating.
The stock is currently trading around its five-year historical mean.
While we like the counter for its defensive traits and consistent performance, we would advocate to enter at a lower price of about $2.40.
We have shifted gears to a neutral view given the good run in share price this year. However, one of our key thesis of taxi recovery is not playing out as expected.
Heightened and prolonged irrational competition from private hire operators that leads to further contraction in taxi fleet may impact our forecast.
The loss of bus contracts, changes in regulations on operations and currency swings may also do so.
Upside risks could arise from acquisitions.
BUMITAMA AGRI | BUY (MAINTAINED)
MAY 15 CLOSE: $0.695
FAIR VALUE: $0.81
UOB Kay Hian, May 15
Bumitama Agri reported core net profit of 26 billion rupiah (S$2.46 million), excluding foreign exchange gains of 84.2 billion rupiah.
The results were below our expectations mainly due to higher operation costs (fertiliser and logistic cost) and financing cost which was mainly affected by higher Libor.
Fresh fruit bunches (FFB) production is in line with our expectation, and we expect higher FFB production over the next three quarters.
Selling expenses should be normalised in the second quarter as most of the high-cost barges contracts will end.
We like Bumitama Agri for its young tree age which spells strong production, as well as its hands-on estate management which has allowed Bumitama Agri to consistently deliver high oil extraction rate.
Bumitama Agri's cash flow should improve with less dilution from new mature areas while mature trees are moving into the high production age (seven years and above).
Share price catalysts include higher-than-expected crude palm oil prices and FFB production.
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