SG: MARKET PULSE: ComfortDelGro (30 Aug 2013)

Stock Name: ComfortDelGro
Company Name: COMFORTDELGRO CORPORATION LTD

Research House: OCBC

Price Call: BUY

Target Price: 1.95

MARKET PULSE: ComfortDelGro

30 Aug 2013

KEY IDEA ComfortDelGro: Recent weakness creates buy-in opportunity ComfortDelgro (CDG) was re-awarded the region 4 contract by the New South Wales transport ministry on Thursday, and this should remove any negative overhang for the group's future in one of its key markets of Australia. However, its share price has failed to react to the news and remains weak, which is unwarranted in our view. Although investors may have concerns over rising fuel prices and the potential for rate hikes, CDG is unaffected given its substantial hedge (80%) on fuel requirements for the rest of the year and low gearing position. Therefore, we feel that this recent share weakness creates an attractive opportunity for investors to allocate into this fundamentally healthy company with earnings stability. We upgrade CDG to BUY with an unchanged fair value estimate of S$1.95. (Lim Siyi)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

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