CD is one of the largest land transport companies in the world, operating in seven countries and with a global network of over 40,000 vehicles. The company’s businesses include bus, taxi, rail, car rental and leasing, automotive engineering, inspection and testing services, drive centres and outdoor advertising. Singapore is the largest contributor of revenue, making up 55% in FY2020, followed by UK/Ireland (23% of total revenue), Australia (19%) and China (4%).
Singapore reopens. The Singapore government yesterday announced that all vaccinated travellers can enter Singapore without quarantine from the first of April. Travellers will no longer be required to take only designated flights to enter Singapore quarantine-free, and will not have to take the antigen rapid test (ART) within 24 hours of arrival. This latest round of easing will make travelling as seamless as it was before the pandemic.
Freedom. On the domestic front, up to 75% of workers can return to their workplaces, while social gatherings will increase up from the 5 maximum limit to 10. This should lead to an increase in daily commuters and benefit CD’s extensive taxi fleet.
Positive street view and attractive valuations. There are currently 9 BUYS and 2 HOLDS, and a 12m average TP of S$1.75 (implying a return of 18% from the last close price). CD trades at 16x FY2022F P/E and only 4.6x FY2022F EV/EBITDA, which is among the cheapest of the transport-related stocks listed in Singapore.
