ComfortDelGro's net profit up 4% to $59.9m

On back of higher revenue.

According to OSK, ComfortDelGro (CD) reported in-line 4Q13 net profit of SGD59.9m (+4.0% y-o-y) while revenue rose 9.5% y-o-y to SGD990.1m (+9.5% y-o-y).

Here's more:

While rail revenues rose 6.9% y-o-y to SGD164.7m, rail profits fell to SGD 4.8m (-66.43% y-o-y), weighed by SGD20m Downtown line (DTL) startup costs. Revenue contribution from DTL will be delayed even as additional expenses are incurred along the way in preparation for Stage 2.

As such, we expect rail operations to swing from its current SGD 4.8m profit to a loss this year and remain subdued moving into 2015. Bus operations, excluding rental and advertising, incurred a loss of SGD14.3m (-2.7% y-o-y), its third straight year of losses.

While the upcoming fare hike will relieve some pressure, we expect the impact to the bottom line to be limited in view of the rising operational expenses. CD’s overseas markets are the bright spots going forward.

Moving into FY14, we see CD’s UK business driving growth as there will be a full 12 months contribution from its Metroline West (compared to 6 months in FY13). Maintain BUY but with a lower TP of SGD2.22 (Previously SGD2.25) based on DCF (WACC: 9.0%; TGR: 1.5%).