Brokers maintain ‘buy’ call on ComfortDelGro despite STI exit

SINGAPORE – Analysts on Friday reiterated their “buy” calls on ComfortDelGro, citing rising ridership of public transport and decent dividend payouts.

This is despite the stock being dropped as a component of Singapore’s Straits Times Index (STI) for falling below the top 30 listed companies by market capitalisation and liquidity on the bourse.

ComfortDelGro was replaced by liquor giant Emprador, which has a primary listing on the Manila bourse and a secondary listing here.

Emperador’s free float of 15.1 per cent just passed the 15 per cent requirement for inclusion on the STI, while ComfortDelGro fell below the threshold.

Emperador is the world’s largest brandy producer and the eighth-largest Scotch whiskey producer globally based on volume in 2021. Its product portfolio includes The Dalmore and Jura whiskeys, as well as brandy under the Fundador and Emperador brands.

At some $8.3 billion on Aug 22, it ranks No. 20 by market capitalisation, thus meeting one of the many STI inclusion rules.

ComfortDelGro had a market cap of $3.1 billion on the same day, making it the smallest among the STI constituents.

The STI rejig saw ComfortDelGro’s stock slide three cents to $1.37 by midday on Friday, while Emprador gained two cents to 51.5 cents.

But analysts are not perturbed.

“We reiterate our ‘add’ call on ComfortDelGro, as we expect further earnings recovery in the coming quarters, driven by improved monetisation of its Singapore taxi business, higher rail ridership, and increased charter activities as tourism recovers,” CGS-CIMB said in a Friday morning report. “ComfortDelGro also offers an attractive dividend yield of 5.9 per cent.”

Maybank agreed. “Fundamentally, we remain upbeat on ComfortDelGro’s sequential earnings recovery along with higher rail and taxi ridership,” it said. “Any price weakness is an opportunity to accumulate the stock with dividend yield of about 5 per cent.”

CGS-CIMB estimates that ComfortDelGro will achieve 27 per cent year-on-year earnings per share growth this year, with its key geographies returning to a “new normal” post-Covid-19 reopening.