ASIAN INSIGHTS VICKERS SECURITIES ed: JS / sa:JC, PY

BUY Last Traded Price ( 11 Nov 2016): S$2.46 (STI : 2,814.60) Price Target 12-mth : S$3.09 (26% upside) (Prev S$3.17) Potential Catalyst: Acquisitions, higher DPS growth Where we differ: Marginally conservative growth assumptions Analyst Andy SIM CFA +65 6682 3718 andysim@dbs.com

What’s New 3Q16 results in line excluding larger than expected

forex translation impact

Expect better growth in 4Q on recent strength of

GBP, AUD against SGD, and bus contract model

Recent correction puts valuation at below 5-year

average; reiterate BUY, S$3.09 TP

Price Relative

Forecasts and Valuation FY Dec (S$ m) 2015A 2016F 2017F 2018F Revenue 4,112 3,971 4,154 4,313 EBITDA 845 847 878 911 Pre-tax Profit 452 483 516 541 Net Profit 302 318 343 360 Net Pft (Pre Ex.) 302 318 343 360 Net Pft Gth (Pre-ex) (%) 6.5 5.2 8.1 4.9 EPS (S cts) 14.1 14.8 16.0 16.8 EPS Pre Ex. (S cts) 14.1 14.8 16.0 16.8 EPS Gth Pre Ex (%) 6 5 8 5 Diluted EPS (S cts) 14.1 14.8 16.0 16.8 Net DPS (S cts) 9.00 9.80 10.9 11.8 BV Per Share (S cts) 109 115 121 127 PE (X) 17.4 16.6 15.3 14.6 PE Pre Ex. (X) 17.4 16.6 15.3 14.6 P/Cash Flow (X) 8.8 7.3 6.5 6.3 EV/EBITDA (X) 6.8 6.6 6.1 5.6 Net Div Yield (%) 3.7 4.0 4.4 4.8 P/Book Value (X) 2.3 2.1 2.0 1.9 Net Debt/Equity (X) CASH CASH CASH CASH ROAE (%) 13.3 13.2 13.6 13.5 Earnings Rev (%): (2) (4) (5) Consensus EPS (S cts): 15.0 16.1 17.1 Other Broker Recs: B: 10 S: 1 H: 4

Source of all data on this page: Company, DBS Bank, Bloomberg Finance L.P.

Growth despite translation headwinds

Maintain BUY, TP lowered slightly to S$3.09. The recent share price weakness further reinforces our recommendation on the counter despite the market’s perceived challenges for the group. We reiterate our BUY recommendation on ComfortDelgro (CD) as valuations of 16.6x/ 15.3x FY16F/ 17F PE are below its historical 5-year average. With lower capex requirements, we believe there is potential for a higher dividend payout.

3Q16 results in line excluding larger-than-expected FX translation. CD’s 3Q16 net profit grew 2.5% y-o-y to S$87.3m, even though revenue slipped by 3.1% to S$1.02bn. This was slightly below our expectations of c.6% growth, due to the larger than expected translational effect. The group’s EBIT margins improved by 22bps to 12.5% in 3Q16 (3Q15: 12.3%) arising largely from lower energy and fuel costs (-24% y-o-y), and materials and consumables (-27%).

4Q16 should show stronger growth vis-à-vis 3Q16. While 3Q16 recorded only 2.5% net profit growth, 9M16 earnings increased 5.2% y-o-y to S$246m. We expect 4Q16 to register stronger growth on the back of the weakening SGD against AUD and GBP in recent days. That said, we trimmed our forecasts by 2%/ 4%/ 5% for FY16F/ 17F/ 18F to factor in a larger than expected fare decrease of 4% and 2% in Singapore for 2017/18 (vs our earlier expectations of 1%), coupled with marginally higher cost assumptions. Despite the weak global outlook, we expect CD to post DPS growth with its lower capex requirements.

Valuation:

Our target price is adjusted to S$3.09, based on average of discounted cash flow (DCF) and price-earnings ratio (PE) valuation methods.

Key Risks to Our View:

Loss of bus contracts, changes in regulations on operations, and currency swings may impact our forecast. At A Glance Issued Capital (m shrs) 2,157 Mkt. Cap (S$m/US$m) 5,305 / 3,755 Major Shareholders (%) Blackrock 6.8 Capital Group Companies 6.0

Free Float (%) 87.2 3m Avg. Daily Val (US$m) 15.6 ICB Industry : Consumer Services / Travel & Leisure

DBS Group Research . Equity 14 Nov 2016

Singapore Company Guide

ComfortDelgro Version 8 | Bloomberg: CD SP | Reuters: CMDG.SI Refer to important disclosures at the end of this report

ASIAN INSIGHTS VICKERS SECURITIES Page 2

Company Guide

ComfortDelgro

WHAT’S NEW

Growth despite translation headwinds

Reiterate BUY, TP: S$3.09; translation may have lesser impact in 4Q16. The recent weak share price further reinforces our recommendation on the counter despite the market’s perceived challenges for the group. While 3Q16 results were a tad slower vis-à-vis expectations, this was largely due to FX translation impact. We think the results were credible in light of current business environment. We expect 4Q to show better y-o-y growth going by the current GBP, AUD strength against SGD quarter-to-date. In addition, with the Singapore Bus operations fully in the Government Bus Contracting model (BCM), we believe this bodes well for the group. Current price implies yield of 4% and 4.4% for FY16F/17F. We are expecting the group’s dividend payout ratio to increase to at least 66%, from 64% in FY15, implying a final DPS of 5.5 Scts (4Q15: 5 Scts) or a yield of 4% (inclusive of interim 4.25 Scts paid) at current price. With lower capex needs, we are expecting dividend payout ratio to conservatively creep up to 66% and 68% in FY17F/18F, and thus yielding 4.4% and 4.8%, respectively. In the current climate, CD is one of few companies projected to have an increase in DPS. 3Q16 results in line excluding larger-than-expected FX translation. CD’s 3Q16 net profit gree 2.5% to S$87.3m, even though revenue slipped by 3.1% y-o-y to S$1.02bn. This was a slightly below our expectations – we were looking at c.6% growth, and in our view, this would have been achieved if not for the larger than expected translational effect. In 3Q16, the weaker GBP and RMB shaved S$4.9m (c.4%) off the operating profits for the group. Revenue dipped by 3.1%. The underlying business recorded a S$15.5m (+1.5%) improvement in topline, but this was totally negated by FX translational loss amounting to S$47.9m arising mainly from translational effects of the weaker GBP (-$45.1m) and RMB (-$4.1m), offset by a slightly stronger AUD (+$1.5m). Among its business segments, bus and taxis still contribute bulk of the group’s revenue at c.83% in 3Q16. Overseas business contributed 36.6% and 41.3% of the group’s revenue and operating profit in 3Q16, down from 40.7% and 49.4%, respectively. The drop in overseas earnings largely came about from translation as well as a stronger contribution from Singapore. EBIT margins improved on lower energy costs. The group’s EBIT margins improved by 22bps to 12.5% in 3Q16 (3Q15: 12.3%) arising largely from lower energy and fuel costs (-24% y-o-y), and materials and consumables (-27%). This was offset partially by staff costs (+0.7%), payment for contract

services (+1.7%) and repair and maintenance (+4.3%), among others. Operating profit dipped marginally by 1.4% y-o-y (or $1.8m) to S$127.2m due to the lower revenue, mitigated partially by a slower rise in operating costs. The net impact of FX translation was S$4.9m, without which, operating profit would have registered a growth of 2.4% instead of a decline. Bus: Impacted by translation as per 2Q. Bus revenue showed a decline of 7.3% y-o-y to S$506.4m vs S$546.2m last year largely due to FX translational impact of S$38.7m. Operating profit dipped by 13% y-o-y to S$47.1m. We estimate the drop came largely from its UK bus operations arising from translation. In fact, its 75% owned subsidiary, SBSTransit, reported a robust set of bus segment profits of S$9.2m (+35.1% y-o-y). Taxis: Results shows resilience. The group’s taxi revenue posted a marginal growth of 0.2% y-o-y to S$335.9m and operating profit of S$47.3m (+1.5% y-o-y). Currency effects eroded S$8.3m of revenue gain. Overall, taxi operating margins continued to expand to 14.1%, up 20bps from 13.9% in 3Q15, attributed to fleet renewal, higher cashless transactions and cost control. Taxi utilisation in Singapore at 99%. Management indicated that despite the challenges, its taxi utilisation is at 99% and revenue grew on the back of its fleet renewal programme. Going forward, we still expect to see revenue growth on the back of this as the group still has around 9k of its total fleet in the Hyundai Sonata model, and yet to be upgraded to the i40 which commands higher a higher daily rental rate. Rail: still subsidising DTL start up costs. While ridership growth for rail was strong, with NEL/ LRT/ DTL(North-East Line/ Light Rail Train/ Downtown Line) registering 5.3%/ 14.7%/ 199% to 577k/ 118k/ 234k trips per day, operating profit dipped by 20% y-o-y to S$0.8m. This came about from continued start up costs in preparation of the DTL3 and higher repair & maintenance. Management indicated that DTL has yet to break even. In preparation of DTL3, hiring of additional staff will continue though it was noted that the key and more senior roles have been filled. We expect costs to creep up, but moderated by higher ridership. Net cash improves to S$259m. The group’s net cash position improved to S$259m, from S$229.2m as of Dec-15. This was despite an increase in receivables arising from timing of service payments by transport regulators in Singapore and the UK. As seen in previous quarter and in line with expectations, net capex continues to trend down and amounted to S$108.9m in 3Q16, from S$123.2m a year ago. The

ASIAN INSIGHTS VICKERS SECURITIES Page 3

Company Guide

ComfortDelgro

reduction arose from lower capex for buses, offset by an increase for taxis. Along with this trend, we continue to believe the group has capacity to further increase its dividend payout ratio, leading to higher DPS growth. Acquisitions. The group continues to work on pursuing acquisitions and will continue to stay within its current geographical and business areas, given its familiarity. In our view, we believe it would continue to be in overseas buses, and deal size would likely be bite-sized and bolt-on, as per its past practice rather than huge ones. Valuation and forecasts 4Q16 should show stronger growth vis-à-vis 3Q16’s growth. While 3Q16 showed only a 2.5% net profit growth, 9M16 earnings grew 5.2% y-o-y to S$246m. We expect 4Q16 to register a stronger growth on the back of the weakening of SGD against AUD and GBP in recent days. That said, we

trimmed our forecasts back by 2%/ 4%/ 5% for FY16F/ 17F/ 18F to factor in a larger than expected fare decrease of 4% and 2% in Singapore for 2017/18 (vs our earlier expectations of 1%), coupled with marginally higher cost assumptions. Reiterate BUY, TP adjusted marginally to S$3.09. We reiterate our BUY recommendation. Although share price has taken a beating in recent days, we believe this may have been overdone. We still believe in the company’s fundamentals and like its business and geographical diversification. At current price, it is trading at 16.6x/ 15.3x FY16F/17F PE, which is below its 5-year historical average. Despite the weak global outlook, we expect CD’s DPS to grow with its lower capex requirements. In addition, its strong balance sheet avails it the capacity to undertake acquisitions to supplement growth. Our TP is revised to S$3.09, still based on average of 17x FY17F PE and DCF (WACC: 9.1%, t=1%).

Quarterly / Interim Income Statement (S$m)

FY Dec 3Q2015 2Q2016 3Q2016 % chg yoy % chg qoq

Revenue 1,048 1,022 1,015 (3.1) (0.7)

Other Oper. (Exp)/Inc (919) (899) (888) (3.3) (1.2)

Operating Profit 129 123 127 (1.4) 3.5

Other Non Opg (Exp)/Inc 4.60 4.30 3.80 (17.4) (11.6)

Associates & JV Inc 0.40 0.70 0.20 (50.0) (71.4)

Net Interest (Exp)/Inc (4.8) (3.7) (3.5) 27.1 5.4

Exceptional Gain/(Loss) 0.0 0.0 0.0 - -

Pre-tax Profit 129 124 128 (1.2) 2.8

Tax (26.1) (23.3) (24.5) (6.1) 5.2

Minority Interest (17.9) (15.7) (15.9) 11.2 1.3

Net Profit 85.2 85.2 87.3 2.5 2.5

Net profit bef Except. 85.2 85.2 87.3 2.5 2.5

EBITDA 233 225 230 (1.3) 2.0

Margins (%)

Opg Profit Margins 12.3 12.0 12.5

Net Profit Margins 8.1 8.3 8.6

Source of all data: Company, DBS Bank

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Company Guide

ComfortDelgro

Segmentals – Revenue and Operating Profit (S$m)

Operating profits (S$m) 3Q15 2Q16 3Q16 3Q yoy 3Q qoq 9M15 9M16 %chg yoy

Bus 54.1 46.7 47.1 -12.9% 0.9% 139.5 130.4 -6.5% Bus Station 3.7 3.2 3.5 -5.4% 9.4% 10.3 10.3 0.0% Rail 1.0 0.2 0.8 -20.0% 300.0% 5.8 4.7 -19.0% Taxi 46.6 46.6 47.3 1.5% 1.5% 127.3 132.4 4.0% Automotive Engineering 10.2 13.5 15.4 51.0% 14.1% 28.8 41.5 44.1% Vehicle Inspection and Testing 9.0 8.1 8.5 -5.6% 4.9% 28.3 25.5 -9.9% Car Rental and Leasing 2.3 2.1 2.2 -4.3% 4.8% 6.6 6.4 -3.0% Driving Centre 2.1 2.5 2.4 14.3% -4.0% 6.4 8.3 29.7%

Total 129.0 122.9 127.2 -1.4% 3.5% 353.0 359.5 1.8% Source of all data: Company, DBS Bank

Operating costs (S$m)

Source: Company

Business segments revenue (S$m) 3Q15 2Q16 3Q16 3Q yoy 3Q qoq 9M15 9M16 %chg yoy

Bus 545.5 512.8 505.8 -7.3% -1.4% 1,560.8 1,510.3 -3.2% Bus Station 8.0 7.0 7.5 -6.3% 7.1% 23.3 22.3 -4.3% Rail 54.7 65.1 69.1 26.3% 6.1% 157.8 199.2 26.2% Taxi 335.2 340.2 335.9 0.2% -1.3% 987.8 1,009.8 2.2% Automotive Engineering 59.1 52.0 51.9 -12.2% -0.2% 179.5 156.4 -12.9% Vehicle Inspection and Testing 25.6 26.1 26.0 1.6% -0.4% 81.3 77.7 -4.4% Car Rental and Leasing 9.9 9.2 9.3 -6.1% 1.1% 28.9 27.9 -3.5% Driving Centre 9.8 9.9 9.9 1.0% 0.0% 29.1 29.7 2.1%

Total 1,047.8 1,022.3 1,015.4 -3.1% -0.7% 3,048.5 3,033.3 -0.5%

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Company Guide

ComfortDelgro

CRITICAL DATA POINTS TO WATCH

Earnings Drivers:

Bus operations in Singapore and overseas. Bus operations account for c.50% and c.37% of the group’s revenue and operating profit respectively. The major profit contribution from its bus operations comes from the UK, followed by Australia. Within these areas of operations, the revenue and earnings drivers are based on tenders for routes, coupled with CD meeting the service requirements set forth by the authorities. Over in Singapore, the model has just transited over to the Bus Contracting Model since 1 Sep 2016 where the fare revenue risks has been transferred over to the government. Taxis hired out and rental rates. Taxi operations account for about one-third of the group’s operating profit, with Singapore operations accounting for the majority. It has a fleet of over 17,000 taxis in Singapore with a market share of 65%. The hired out and rental rates of taxis has a direct impact on profitability, while the cost of certificates of entitlement in Singapore would also have an impact on margins (impacting depreciation). In the immediate term, we do not expect significant impact from the private car booking apps, such as Uber or Grabcar, and we believe that private car hire and taxis would co-exist over the longer term. Oil prices. Fuel and electricity historically accounts for c.8% of CD’s sales historically and a surge in oil price may impact margins. Management seeks to hedge its exposure to oil prices by entering into forward contracts, thus mitigating volatile fluctuations. We are projecting that fuel and electricity as a percentage of revenue to dip to c.5% in FY16F on lower oil prices. Overseas presence through acquisitions. Since 2003, revenue contribution from overseas has increased from 35% to 40% (as of end-2014), while operating profit contribution stands at 49% (from 26%) a decade ago. Management has indicated a target of further increasing overseas revenue contribution to 70%. This is likely to be achieved through organic growth (winning of tenders) and inorganic sources, such as bite-sized acquisitions. Earnings growth of 5%/ 8% for 16F/17F. CD’s growth has been stable, posting average CAGR of 6% in the past five years (2011 to 2015). We project earnings growth of 5%/ 8% for FY16F/17F driven by higher ridership, rental rates for its taxis, coupled with lower energy costs (on the back of lower oil prices).

SGP bus ridership growth (%)

SGP fare chg (%)

Avg oil price (US$)

Chg in staff strength (%)

Operating profit contribution 3Q16 (by country)

Source: Company, DBS Bank

Singapore58.7%

UK17.6%

Australia12.5%

China10.9%

Vietnam and

Malaysia0.3%

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Company Guide

ComfortDelgro

Balance Sheet:

Low gearing provides opportunities for inorganic growth. The group’s balance sheet remains strong with gross debt-to-equity at <0.2x while net debt-to-equity hovers near zero. This provides the group with ample headroom for overseas acquisitions to supplement growth and further diversify its geographical exposure out of Singapore. Capex to taper from FY16F. We expect capex requirements to taper from FY16F with a step down in its bus assets enhancement in Singapore as new buses will be funded by the authorities. This could provide a lift to available cash for acquisitions and/or higher dividend payout. Share Price Drivers:

Higher dividend payout. With the new Government Bus Contracting model to be in place from 1 September 2016, new buses will be funded by the authorities and this will raise the free cash flow for CD and further add to its strong cash horde. Whilst we have factored in a gradually increasing payout ratio by 2% each year to 70% by FY18F (from 64% in FY15), we believe the group has potential to further raise its payout ratio faster and more aggressively. This could be an added catalyst. Acquisitions. CD has successfully diversified its operations outside of Singapore over the past decade through bite-sized acquisitions. Further accretive acquisitions to leverage on its strong balance sheet could provide further catalysts to its share price. Key Risks:

Oil price surge. Energy and fuel costs historically accounts for about 8% of CD's sales and a surge in oil price may impact margins and vice versa, though this is partially mitigated by its hedging policies. Regulatory risks. Lower-than-expected fare increase, and or changes in regulations to the operations, may impact our forecasts. Company Background

ComfortDelGro Corporation Limited (CD) is a land transport service company. Its business includes bus, taxi, rail car rental and leasing, automotive engineering services, testing services, etc. Besides being a market leader for buses and taxis in Singapore, its business spans across other geographies such as UK, Australia, China, Vietnam and Malaysia.

Leverage & Asset Turnover (x)

Capital Expenditure

ROE (%)

Forward PE Band (x)

PB Band (x)

Source: Company, DBS Bank

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Company Guide

ComfortDelgro

Key Assumptions

FY Dec 2014A 2015A 2016F 2017F 2018F SGP fare chg (%) 5.04 0.08 (2.0) (4.0) (1.9) Avg oil price (US$) 90.0 70.0 45.0 50.0 50.0 Chg in staff strength (%) 4.00 1.00 (1.0) 2.00 1.00

Segmental Breakdown

FY Dec 2014A 2015A 2016F 2017F 2018F Revenues (S$m) Bus & Bus Station 2,084 2,148 1,941 2,000 2,041 Rail 197 213 261 292 336 Taxi 1,284 1,327 1,428 1,501 1,570 Automotive Engn 303 239 156 177 181 Others 184 185 184 184 184 Total 4,051 4,112 3,971 4,154 4,313 EBIT (S$m)

Bus & Bus Station 177 187 185 217 225 Rail 7.60 3.20 3.92 7.30 16.8 Taxi 151 164 171 180 188 Automotive Engn 51.4 41.2 45.4 44.3 45.2 Others 55.1 55.4 70.7 53.9 45.6 Total 442 451 477 502 521 EBIT Margins (%) Bus & Bus Station 8.5 8.7 9.6 10.8 11.0 Rail 3.9 1.5 1.5 2.5 5.0 Taxi 11.8 12.4 12.0 12.0 12.0 Automotive Engn 17.0 17.3 29.0 25.0 25.0 Others 29.9 30.0 38.3 29.3 24.8 Total 10.9 11.0 12.0 12.1 12.1

Income Statement (S$m)

FY Dec 2014A 2015A 2016F 2017F 2018F Revenue 4,051 4,112 3,971 4,154 4,313 Other Opng (Exp)/Inc (3,609) (3,661) (3,494) (3,652) (3,791) Operating Profit 442 451 477 502 521 Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0 Associates & JV Inc 4.30 4.90 5.39 5.93 6.52 Net Interest (Exp)/Inc (10.1) (3.4) 1.03 7.35 12.9 Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0 Pre-tax Profit 436 452 483 516 541 Tax (92.3) (88.4) (101) (103) (108) Minority Interest (60.5) (61.9) (64.1) (69.3) (72.7) Preference Dividend 0.0 0.0 0.0 0.0 0.0 Net Profit 284 302 318 343 360 Net Profit before Except. 284 302 318 343 360 EBITDA 800 845 847 878 911 Growth Revenue Gth (%) 8.1 1.5 (3.4) 4.6 3.8 EBITDA Gth (%) 4.2 5.6 0.3 3.7 3.7 Opg Profit Gth (%) 3.7 1.9 5.8 5.4 3.8 Net Profit Gth (Pre-ex) (%) 7.7 6.5 5.2 8.1 4.9 Margins & Ratio Opg Profit Margin (%) 10.9 11.0 12.0 12.1 12.1 Net Profit Margin (%) 7.0 7.3 8.0 8.3 8.3 ROAE (%) 13.1 13.3 13.2 13.6 13.5 ROA (%) 5.5 5.8 6.1 6.5 6.7 ROCE (%) 8.2 8.6 8.9 9.5 9.6 Div Payout Ratio (%) 62.2 63.8 66.0 68.0 70.0 Net Interest Cover (x) 43.8 132.6 NM NM NM

Source: Company, DBS Bank

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Company Guide

ComfortDelgro

Quarterly / Interim Income Statement (S$m)

FY Dec 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 Revenue 1,048 1,063 996 1,022 1,015 Other Oper. (Exp)/Inc (919) (965) (886) (899) (888) Operating Profit 129 97.7 109 123 127 Other Non Opg (Exp)/Inc 4.60 3.10 3.20 4.30 3.80 Associates & JV Inc 0.40 2.50 1.70 0.70 0.20 Net Interest (Exp)/Inc (4.8) (4.4) (4.0) (3.7) (3.5) Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0 Pre-tax Profit 129 98.9 110 124 128 Tax (26.1) (17.2) (21.9) (23.3) (24.5) Minority Interest (17.9) (13.5) (15.0) (15.7) (15.9) Net Profit 85.2 68.2 73.4 85.2 87.3 Net profit bef Except. 85.2 68.2 73.4 85.2 87.3 EBITDA 233 206 210 225 230 Growth Revenue Gth (%) 1.0 1.5 (6.3) 2.7 (0.7) EBITDA Gth (%) 4.9 (11.3) 1.9 7.0 2.0 Opg Profit Gth (%) 6.7 (24.3) 12.0 12.3 3.5 Net Profit Gth (Pre-ex) (%) 5.3 (20.0) 7.6 16.1 2.5 Margins Gross Margins (%) 100.0 100.0 100.0 100.0 100.0 Opg Profit Margins (%) 12.3 9.2 11.0 12.0 12.5 Net Profit Margins (%) 8.1 6.4 7.4 8.3 8.6

Balance Sheet (S$m)

FY Dec 2014A 2015A 2016F 2017F 2018F Net Fixed Assets 2,895 2,909 2,894 2,824 2,741 Invts in Associates & JVs 8.00 10.2 15.6 21.5 28.0 Other LT Assets 1,088 1,017 1,017 1,017 1,017 Cash & ST Invts 826 788 811 906 1,208 Inventory 72.3 75.1 72.2 75.5 78.4 Debtors 120 140 142 148 154 Other Current Assets 221 277 277 277 277 Total Assets 5,231 5,216 5,230 5,269 5,504 ST Debt 243 126 100 100 100 Creditor 837 833 764 799 829 Other Current Liab 178 177 229 231 236 LT Debt 494 432 300 100 100 Other LT Liabilities 640 635 635 635 635 Shareholder’s Equity 2,190 2,335 2,460 2,594 2,720 Minority Interests 649 678 742 811 884 Total Cap. & Liab. 5,231 5,216 5,230 5,269 5,504 Non-Cash Wkg. Capital (601) (519) (502) (529) (556) Net Cash/(Debt) 88.7 229 411 706 1,008 Debtors Turn (avg days) 10.8 11.5 12.9 12.7 12.8 Creditors Turn (avg days) 84.2 93.2 93.1 86.9 87.2 Inventory Turn (avg days) 8.0 8.2 8.6 8.2 8.2 Asset Turnover (x) 0.8 0.8 0.8 0.8 0.8 Current Ratio (x) 1.0 1.1 1.2 1.2 1.5 Quick Ratio (x) 0.8 0.8 0.9 0.9 1.2 Net Debt/Equity (X) CASH CASH CASH CASH CASH Net Debt/Equity ex MI (X) CASH CASH CASH CASH CASH Capex to Debt (%) 63.9 69.4 87.5 150.0 150.0 Z-Score (X) 3.0 3.3 3.4 3.7 3.7

Source: Company, DBS Bank

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Company Guide

ComfortDelgro

Cash Flow Statement (S$m)

FY Dec 2014A 2015A 2016F 2017F 2018F Pre-Tax Profit 436 452 483 516 541 Dep. & Amort. 354 389 365 370 383 Tax Paid (83.1) (81.8) (49.1) (101) (103) Assoc. & JV Inc/(loss) (4.3) (4.9) (5.4) (5.9) (6.5) Chg in Wkg.Cap. 23.8 (23.4) (69.1) 25.4 21.9 Other Operating CF (87.4) (131) 0.0 0.0 0.0 Net Operating CF 639 600 725 804 836 Capital Exp.(net) (471) (388) (350) (300) (300) Other Invts.(net) (28.7) (1.3) 0.0 0.0 0.0 Invts in Assoc. & JV (0.5) 0.0 0.0 0.0 0.0 Div from Assoc & JV 3.00 2.90 0.0 0.0 0.0 Other Investing CF 12.5 14.1 0.0 0.0 0.0 Net Investing CF (485) (372) (350) (300) (300) Div Paid (165) (183) (193) (210) (233) Chg in Gross Debt (61.5) (190) (159) (200) 0.0 Capital Issues 22.6 17.7 0.0 0.0 0.0 Other Financing CF 41.7 85.4 0.0 0.0 0.0 Net Financing CF (163) (269) (351) (410) (233) Currency Adjustments 3.40 2.80 0.0 0.0 0.0 Chg in Cash (4.8) (38.0) 23.6 94.2 302 Opg CFPS (S cts) 28.8 29.1 37.1 36.4 38.0 Free CFPS (S cts) 7.86 9.93 17.5 23.5 25.0

Source: Company, DBS Bank

Target Price & Ratings History

Source: DBS Bank

Analyst: Andy SIM CFA

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Company Guide

ComfortDelgro

DBS Bank recommendations are based an Absolute Total Return* Rating system, defined as follows:

STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)

BUY (>15% total return over the next 12 months for small caps, >10% for large caps)

HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)

FULLY VALUED (negative total return i.e. > -10% over the next 12 months)

SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)

Share price appreciation + dividends Completed Date: 14 Nov 2016 08:37:53 Dissemination Date: 14 Nov 2016 08:40:42

GENERAL DISCLOSURE/DISCLAIMER

This report is prepared by DBS Bank Ltd. This report is solely intended for the clients of DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd,

its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated

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ASIAN INSIGHTS VICKERS SECURITIES Page 11

Company Guide

ComfortDelgro

ANALYST CERTIFICATION The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in the report. The DBS Group has procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of research reports. As of 14 Nov 2016, the analyst(s) and his/her spouse and/or relatives who are financially dependent on the analyst(s), do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities). The research analyst(s) responsible for this report operates as part of a separate and independent team to the investment banking function of the DBS Group and procedures are in place to ensure that confidential information held by either the research or investment banking function is handled appropriately.

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ComfortDelgro recommended in this report as of 31 Oct 2016.

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ASIAN INSIGHTS VICKERS SECURITIES Page 12

Company Guide

ComfortDelgro

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