Analyst Zheng Feng Chee of DBS reiterated a Buy rating on Comfortdelgro (CDGLF – Research Report), retaining the price target of S$1.80.
Zheng Feng Chee’s rating is based on the anticipated strong growth trajectory for Comfortdelgro, driven by its international expansion efforts. The company is projected to achieve a 14% earnings growth in FY25, with significant contributions expected from its acquisitions like Addison Lee and the UK bus segment. These acquisitions are set to enhance the company’s earnings, offsetting weaker performance in the Singapore taxi segment and higher interest costs.
Furthermore, the strategic expansion into international markets is expected to transform Comfortdelgro’s earnings profile, with international operations projected to contribute more significantly to profits by FY26. Despite some challenges, such as increased interest expenses and competitive pressures in Singapore, the overall growth outlook remains positive. The valuation remains attractive, supported by a favorable PEG ratio and dividend yield, justifying the Buy rating with a target price of SGD1.80.