ComfortDelGro - Sell: 1Q09 Profit S$52.5m (4Q: S$44.8m)

Results inline — Group revenue fell 6%qoq to S$717m (non-fuel -4%qoq) offset by lower staff and fuel expenditure to deliver net profit of S$52.5m, (+4.6%yoy, +17%qoq) and c.24% of Citi and consensus FY09 estimates. The stock has underperformed the index in the recent rally (+1% vs +46% for STI since March) and will likely continue so if the STI moves towards our 2,400 target. Maintain Sell.

Bus — Bus revenue down 4%qoq to S$354m (4Q: S$369m). By geography, Singapore revenue slipped slightly by 0.8%qoq while UK fell by 10%qoq to S$131m (weaker GBP). Australia grew by 12%qoq following acquisition of Victoria business in Feb-09. Benefiting from lower fuel and manpower costs, operating profit rose by S$8.5m to S$29.6m, with 48% sourced from overseas.

Rail — Revenue rose slightly by 1.4%qoq as operating profit dropped to S$5.3m (4Q: S$6.1m). Recent ridership trends suggest a moderating of the strong, double-digit growth seen in early 2008 (Mar 2009 +7.8%yoy).  Taxi — 1Q op. profit was S$24.3m (-11%yoy, -2.8%qoq). Singapore revenue S$152m (4Q: S$162m) while overseas revenue fell to S$73m (4Q S$77m) with weaker UK performance partly offset by better results in China.

Diesel sales — 1Q profit was S$4.5m (4Q: S$5.8m) as 1Q avg spot diesel fell to US$57/bbl (4Q: US$76/bbl). 1Q09 QTD diesel cost was US$60/bbl, suggesting that profit on diesel sales (partly offset by diesel hedging losses) could continue assuming prices stay at these lower levels.

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