ComfortDelGro shares: what's next in view of Australia IPO?
The transport operator’s shares climbed some 5% after it shared its intention to list its Australian subsidiary on the Australian Securities Exchange (ASX).
- ComfortDelGro (SGX: C52) share price climbed to a two-month high of S$1.69 on Monday (18 August 2021)
- The transport group plans to list ComfortDelGro Corporation Australia Pty Ltd on the ASX by the end of this year
- Last week, it also announced its first-half financial results, which were in line with analyst estimates
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ComfortDelGro stock price: what’s the latest?
ComfortDelGro shares rallied as much as 5% earlier this week, after it announced plans to pursue an initial public offering (IPO) on the ASX for its wholly-owned subsidiary, ComfortDelGro Corporation Australia Pty Ltd (CDC).
The proposed listing, which has been planned for the last quarter of 2021, will seek to unlock the value of the group’s ‘significant’ land transport business assets in Australia.
ComfortDelGro first began operations in Australia 16 years ago through the acquisition of the businesses of New South Wales bus operator, Bosnjak Holdings. The group has since grown significantly, and now operates in six states across Australia, and has a total fleet of over 4,400 vehicles.
With a total investment of S$1.17 billion to-date, Australia is now the group’s single largest overseas investment destination. For the year ended 31 December 2020, the Australian businesses generated revenue of S$608 million.
On the proposed IPO, ComfortDelGro Chairman, Lim Jit Poh, believes that ‘the time is now right to share this Australian growth story with Australian investors’.
CDC has appointed Credit Suisse Australia and UBS Australia as joint lead managers for the IPO.
The IPO, including its structure and terms of offering, are subject to prevailing market conditions and relevant approvals.
What is your view on ComfortDelGro? Take a long or short position today
The blue-chip stock is up 4.5% in the last one month. It has a consensus rating of ‘outperform’ and target price of S$1.92 (equating to a potential 17.8% upside), based on the latest SGX StockFacts analyst data.
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How do analysts view the stock?
Last week, ComfortDelGro published its financial results for the first six months of 2021, in which group revenue for the period grew by 13.6% year-on-year to S$1.74 billion.
The revenue growth came as ‘global economic activity gradually resumed amidst the ongoing global pandemic’.
Excluding the various government relief packages, the group turned in an operating profit of S$77.4 million against a loss of S$76.5 million a year ago.
The group registered a net profit attributable to shareholders of S$91 million, compared to a net loss of S$6.6 million during the corresponding period last year.
ComfortDelGro Managing Director/Group CEO, Mr Yang Ban Seng, said H1 2021 was ‘painful but tolerable’, with ‘the continuous see-saw effect of lockdowns and reopenings’ taking its toll on the business.
Maybank analyst Kareen Chan said the group’s results were ‘respectable’. ComfortDelGro’s net profit was also in line with the firm’s estimates.
She maintained a ‘buy’ recommendation on the stock alongside a target price of S$1.88, as the company offers exposure to domestic transport recovery as ‘reopening prospects…remain bright’.
Re-rating catalyst could come from the unlocking of value of its Australian assets, she added.
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