ComfortDelgro - TP Upgrade

8/13/2019 ComfortDelgro - TP Upgrade

1/18

Key company data: See page 2 for company data and detailed price/index chart.

ComfortDelGro Corp CMDG.SI CD SPTRANSPORT/LOGISTICS

EQUITY RESEARCH

Take advantage of temporary weakness

Reasonably priced with multiplepotential upside possibil ities

June 3, 2013

RatingRemains

Buy

arget price

Increased from 2.13SGD 2.19

Closing price

May 31, 2013SGD 1.90

Potential upside +15.3%

Action/Catalyst: TP raised to SGD2.19; looks reasonably priced

As we move into 2H13, it increasingly makes sense to start anchoringreturns based on 2014F earnings. As such, we raise our TP to SGD2.19,premised on our 2013/14F blended EPS of 12.9S$cent. We believe thestock is reasonably priced at the middle of its three-year trading range.

Catalyst: Upside from M&A and optionality on fare increase

There remains potential upside to our forecasts and valuations. Webelieve the group is still actively deploying its cash hoard into acquisitionswhich should be accretive to earnings and valuations. We estimate everySGD50mn worth of acquisitions will add ~2.4S$cent to our TP (+1%).

Separately, a fare increase could potentially add ~8S$cent to our TP(+4%) for every 1cent increase in fares. We do not profess to have anyinsight as to whether a fare increase will materialise, but choose to view itas an out-of-money option that comes free with the stock and which couldbe meaningful to earnings and valuations if it happens.

ValuationsIn the meantime, investors are paid to wait for the upside events tomaterialise as the stock offers a FY13/14F dividend yield of 3.5/3.7%. Thestock trades at 15.3/14.3x FY13/14F P/E (FY13/14F EPS of12.5/13.3S$cent, respectively) which is in the middle of its three-yeartrading range (11-17x).

Key risks include a loss of Australian bus contracts; higher-than-expectedlosses on DTL; regulatory changes; North-East Line breakdown; currency;higher oil price; higher staff cost.

31 Dec FY12 FY13F FY14F FY15F

Currency (SGD) Actual Old New Old New Old New

Revenue (mn) 3,545 3,689 3,785 3,872 4,059 4,211

Reported net profit (mn) 249 263 262 290 280 289

Normalised net profit (mn) 249 263 262 290 280 289

FD normalised EPS 11.84c 12.60c 12.46c 13.89c 13.31c 13.77c

FD norm. EPS growth (%) 5.1 5.7 5.2 10.2 6.8 3.5

FD normalised P/E (x) 16.1 N/A 15.3 N/A 14.3 N/A 13.8

EV/EBITDA (x) 5.4 N/A 5.3 N/A 4.7 N/A 4.4

Price/book (x) 2.0 N/A 1.9 N/A 1.8 N/A 1.7

Dividend yield (%) 3.4 N/A 3.5 N/A 3.7 N/A 4.0

ROE (%) 12.8 12.7 12.6 13.1 12.7 12.3

Net debt/equity (%) 0.4 0.4 3.2 net cash net cash net cash

Source: Company data, Nomura estimates

Anchor themes

Singapores long-term goal ofhaving at least 70% (fromcurrent 63%) of its population

relying on public transport by2020 means the two incumbentgovernment-linked operatorsstand to benefit from higherridership, particularly in the busand rail segments.

Nomura vs consensus

Our FY13F earnings are in linewith consensus estimates but2% above for FY14F earnings.

Research analysts

Singapore Transport/Logistics

Wen Jie Chan - NSL

[email protected]+65 6433 6965

See Appendix A-1 for analystcertification, importantdisclosures and the status ofnon-US analysts.


2/18

Nomura | ComfortDelGro Corp June 3, 2013

2

Key data on ComfortDelGro CorpIncomestatement(SGDmn)Year-end 31 Dec FY11 FY12 FY13F FY14F FY15F

Revenue 3,411 3,545 3,785 4,059 4,211

Cost of goods sold -2,531 -2,643 -2,845 -3,057 -3,172

Gross profit 880 902 940 1,002 1,040

SG&A -481 -490 -510 -541 -561

Employee share expense

Operating profit 399 412 430 462 479

EBITDA 716 735 763 819 850

Depreciation -317 -323 -333 -358 -371

Amortisation 0 0 0

EBIT 399 412 430 462 479

Net interest expense -35 -31 -28 -33 -35

Associates & JCEs 5 4 4 4 5

Other income 10 12 8 8 8

Earnings before tax 379 396 413 441 457

Income tax -82 -86 -87 -93 -96

Net profit after tax 298 311 327 349 361

Minority interests -62 -62 -65 -69 -71

Other items 0 0

Preferred dividends 0 0 0

Normalised NPAT 236 249 262 280 289

Extraordinary items 0 0 0

Reported NPAT 236 249 262 280 289

Dividends -125 -135 -139 -147 -160

Transfer to reserves 110 114 123 133 130

Valuation and ratio analysis

Reported P/E (x) 16.9 16.1 15.3 14.3 13.8

Normalised P/E (x) 16.9 16.1 15.3 14.3 13.8

FD normalised P/E (x) 16.9 16.1 15.3 14.3 13.8

FD normalised P/E at price target (x) 19.4 18.5 17.6 16.5 15.9

Dividend yield (%) 3.1 3.4 3.5 3.7 4.0

Price/cashflow (x) 4.8 5.2 5.4 4.8 4.7

Price/book (x) 2.1 2.0 1.9 1.8 1.7

EV/EBITDA (x) 5.6 5.4 5.3 4.7 4.4

EV/EBIT (x) 10.0 9.6 9.3 8.3 7.7

Gross margin (%) 25.8 25.5 24.8 24.7 24.7EBITDA margin (%) 21.0 20.7 20.2 20.2 20.2

EBIT margin (%) 11.7 11.6 11.4 11.4 11.4

Net margin (%) 6.9 7.0 6.9 6.9 6.9

Effective tax rate (%) 21.5 21.6 21.0 21.0 21.0

Dividend payout (%) 53.3 54.0 53.0 52.6 55.2

Capex to sales (%) 14.8 13.9 12.2 10.5 10.4

Capex to depreciation (x) 1.6 1.5 1.4 1.2 1.2

ROE (%) 12.8 12.8 12.6 12.7 12.3

ROA (pretax %) 10.3 10.2 10.1 10.3 10.5

Growth (%)

Revenue 6.4 3.9 6.8 7.2 3.7

EBITDA 5.4 2.7 3.8 7.3 3.7

EBIT 2.8 3.3 4.3 7.4 3.6

Normalised EPS 2.9 5.1 5.2 6.8 3.5

Normalised FDEPS 2.9 5.1 5.2 6.8 3.5

Per share

Reported EPS (SGD) 11.27c 11.84c 12.46c 13.31c 13.77c

Norm EPS (SGD) 11.27c 11.84c 12.46c 13.31c 13.77c

Fully diluted norm EPS (SGD) 11.27c 11.84c 12.46c 13.31c 13.77c

Book value per share (SGD) 0.90 0.96 1.02 1.08 1.15

DPS (SGD) 0.06 0.06 0.07 0.07 0.08


Relative perfo rmance chart (one year)

Source: ThomsonReuters, Nomura research

(%) 1M 3M 12M

Absolute (SGD) -4.0 -0.8 29.6

Absolute (USD) -6.3 -2.9 31.7

Relative to index -1.6 -2.0 12.1

Market cap (USDmn) 3,152.4

Estimated free float (%) 87.8

52-week range (SGD) 2.21/1.44

3-mth avg daily turnover(USDmn)

13.77

Major shareholders (%)

Singapore LabourFoundation

12.2

Source: Thomson Reuters, Nomura research

Notes

FY14F to benefit from DTL

commencement


3/18


3

Cashflow(SGDmn)Year-end 31 Dec FY11 FY12 FY13F FY14F FY15F

EBITDA 716 735 763 819 850

Change in working capital 137 3 -20 18 11

Other operating cashflow -31 25 -1 -1 -4

Cashflow from operations 822 763 742 836 857

Capital expenditure -503 -492 -463 -426 -440

Free cashflow 318 272 279 410 417

Reduction in investments -79 21 0 0 0

Net acquisitions -69

Reduction in other LT assets 81 -27 -4 -4 -5

Addition in other LT liabilities 67 4 9 10 10

Adjustments -96 -94 -114 -79 -79

Cashflow after investing acts 291 177 102 336 343

Cash dividends -115 -130 -132 -140 -152

Equity issue 0 0 0 0 0

Debt issue -120 87 84 44 -65

Convertible debt issue 0 0 0 0 0

Others -46 -16 -28 -33 -35

Cashflow from financial acts -281 -59 -76 -129 -251

Net cashflow 10 118 25 207 92

Beginning cash 567 577 695 720 927

Ending cash 577 695 720 927 1,019

Ending net debt 55 9 68 -96 -252


Balancesheet(SGDmn)As at 31 Dec FY11 FY12 FY13F FY14F FY15F

Cash & equivalents 577 695 720 927 1,019

Marketable securities 18 0 0 0 0

Accounts receivable 133 129 150 161 167

Inventories 57 58 62 67 70

Other current assets 196 213 264 280 289

Total current assets 979 1,094 1,197 1,435 1,545

LT investments 86 83 83 83 83

Fixed assets 3,011 3,100 3,339 3,407 3,476

Goodwill 146 176 176 176 176

Other intangible assets 0 0 0 0 0

Other LT assets 367 393 397 402 406

Total assets 4,589 4,846 5,191 5,503 5,685

Short-term debt 198 96 114 222 129Accounts payable 601 607 662 710 737

Other current liabilities 203 214 216 218 219

Total current liabilities 1,002 917 992 1,150 1,086

Long-term debt 434 608 674 609 637

Convertible debt 0 0 0 0 0

Other LT liabilities 680 684 693 703 713

Total liabilities 2,115 2,209 2,359 2,462 2,435

Minority interest 582 629 693 763 834

Preferred stock 0 0 0 0

Common stock 569 585 585 585 585

Retained earnings 1,323 1,423 1,553 1,693 1,831

Proposed dividends 0 0 0

Other equity and reserves 0 0 0

Total shareholders' equity 1,892 2,008 2,138 2,278 2,416

Total equity & liabilities 4,589 4,846 5,191 5,503 5,685

Liquidity (x)

Current ratio 0.98 1.19 1.21 1.25 1.42

Interest cover 11.3 13.1 15.1 14.1 13.9

Leverage

Net debt/EBITDA (x) 0.08 0.01 0.09 net cash net cash

Net debt/equity (%) 2.9 0.4 3.2 net cash net cash

Act ivi ty (d ays)

Days receivable 12.7 13.5 13.4 14.0 14.2

Days inventory 8.3 7.9 7.7 7.7 7.9

Days payable 82.6 83.7 81.4 81.9 83.3

Cash cycle -61.6 -62.2 -60.3 -60.2 -61.2


Notes

Strong FCF generation across

forecast period

Notes

Low gearing going into net cash

position


4/18


4

ValuationsOverall, we believe valuations appear reasonable at current levels, especially if we

assess them based on 2014F earnings. There remains certain potential upside

possibilities from current levels, in our opinion, namely accretive acquisitions and

potential fare increases. In the meantime, investors are paid a FY13F dividend yield of

3.5% while waiting for the upside events to materialise, which gives them a return and

help reduce the downside risk. As such, we think the risk/reward at this level is

reasonably attractive.

Looking ahead into FY14F

In our opinion, 2014 will be a year of significant development for the group, relative to

2013. The new Downtown Line will have already commenced and should be contributing

meaningfully. Recent acquisitions whose cumulative deal sizes are close to an all-time

high are also likely to start contributing on a full-year basis. Further, as we move into

2H13F, it increasingly makes sense for investors to start anchoring returns based on

FY14F earnings. As such, we raise our TP to S$2.19, premised on blended FY13/14F

EPS of 12.9$cent.

We cross-check our SOTP valuations against other valuation methods and generally

found support for our TP.

The stock currently trades at FY13/14F P/E of 15.3/14.3x FY13/14F P/B of 1.9/1.8x,

which is at the mid-end of its recent trading band (three-year range: 11-17x). It offers a

FY13/14F dividend yield of 3.5/3.7%.

Fig. 1: SOTP

Source: Nomura estimates

SOTP FY13 E P/E Valuation Basis

Taxi - SG 88.4 19 1,701 Premium for being mkt leader

Bus + Rail + ad + rental - SG (ex DTL) 24.6 17 419 SMRT valuations

DTL 472 DCF

Bus + Taxi - UK 28.7 11 315 UK peers valuations

Bus + Taxi - Australia 25.1 12 301 Cabcharge valuations

Bus + Taxi - China + Vietnam 16.7 12 201 Cabcharge valuations

Inspection/testing 21.1 16 338 Vicom valuations

Driving school 8.7 16 139 Vicom valuations

Automotive & Car Rental 52.1 10 521 Stable underlying business

Equity stake in Cabcharge 59 9.6% stake in CAB AU @ market price

Total (S$'mn) 262.0 17.0 4,466

Shares('000) 2,102,000

TP 2.12

SOTP FY14 E P/E Valuation Basis

Taxi - SG 92.3 19 1,778 Premium for being mkt leader

Bus + Rail + ad + rental - SG (ex DTL) 28.7 17 488 SMRT valuations

DTL 487 DCF

Bus + Taxi - UK 34.9 11 384 UK peers valuations

Bus + Taxi - Australia 24.0 12 288 Cabcharge valuations

Bus + Taxi - China + Vietnam 17.8 12 214 Cabcharge valuations

Inspection/testing 22.7 16 364 Vicom valuationsDriving school 8.9 16 142 Vicom valuations

Automotive & Car Rental 54.2 10 542 Stable underlying business

Equity stake in Cabcharge 59 9.6% stake in CAB AU @ market price

Total (S$'mn) 279.7 17.0 4,745

Shares('000) 2,102,000

TP 2.26

Blended TP 2.19


5/18


5

Fig. 2: Valuation range

Source: Nomura research

Fig. 3: 12-month forward P/E band

Mid range of trading range

Source: Bloomberg, Nomura research

Fig. 4: 12-month fo rward P/B band

Mid range of trading range

Source: Bloomberg, Nomura research

Fig. 5: Peer comps

Source: Bloomberg consensus for Not Rate (NR) stocks, Nomura estimates; Prices as at 31 May 2013

2.00

1.80

2.19

2.38

1.00 1.20 1.40 1.60 1.80 2.00 2.20 2.40 2.60

Historical valuations - P/B

Historical valuations - P/E

SOTP

DCF

0.5

1.0

1.5

2.0

2.5

3.0

May-03

Aug-03

Nov-03

Mar-04

Jun-04

Oct-04

Jan-05

May-05

Aug-05

Dec-05

Mar-06

Jun-06

Oct-06

Jan-07

May-07

Aug-07

Dec-07

Mar-08

Jul-08

Oct-08

Jan-09

May-09

Aug-09

Dec-09

Mar-10

Jul-10

Oct-10

Feb-11

May-11

Sep-11

Dec-11

Mar-12

Jul-12

Oct-12

Feb-13

May-13

Price (S$)

20X

18X

16X

14X

12X

10X

0.50

0.70

0.90

1.10

1.30

1.50

1.70

1.90

2.10

2.30

2.50

1.0

1.5

2.0

2.5

3.0

3.5

May-03

Sep-03

Dec-03

Apr-04

Jul-04

Nov-04

Feb-05

May-05

Sep-05

Dec-05

Apr-06

Jul-06

Oct-06

Feb-07

May-07

Sep-07

Dec-07

Apr-08

Jul-08

Oct-08

Feb-09

May-09

Sep-09

Dec-09

Mar-10

Jul-10

Oct-10

Feb-11

May-11

Sep-11

Dec-11

Mar-12

Jul-12

Oct-12

Feb-13

May-13

Price (S$)PBV (x)

PBV (RHS) Average SD- SD+ Price (LHS)

Ticker Rating

Mkt Cap

(US$ mn)

Price

(LC)

P/E (x)

2013E

P/E (x)

2014E

P/B (x)

2013E

P/B (x)

2014E

EV/EBITDA

(x)

2013E

EV/EBITDA

(x)

2014E

ROE

(%)

2013E

ROE

(%)

2014E

Div yield

(%)

2013E

Div yield

(%)

2014E

Debt/

Asset

(%)

Singapore

Comfort Delgro CD SP BUY 3,193 1.905 15.2 14.3 1.9 1.8 6.1 5.7 12.6 12.7 3.5 3.7 15.2SMRT MRT SP REDUCE 1,721 1.43 22.3 20.5 2.6 2.5 7.5 6.9 12.1 12.5 2.8 3.0 30.2SG Average 18.8 17.4 2.3 2.1 6.8 6.3 12.4 12.6 3.1 3.3 22.7

HK

MTR Corp 66 HK BUY 22,922 30.7 22.1 17.6 1.2 1.2 14.4 12.3 5.6 7.0 2.6 2.6 16.6

HK Average 22.1 17.6 1.2 1.2 14.4 12.3 5.6 7.0 2.6 2.6 16.6

Asia Average 19.9 17.5 1.9 1.8 9.3 8.3 10.1 10.7 3.0 3.1 20.7

Japan

East Japan Railway 9020 JP BUY 29,855 7580 14.9 16.4 1.4 1.3 7.9 7.6 9.6 9.6 1.7 1.8 44.2

West Japan Railway 9021 JP BUY 8,331 4225 13.1 13.7 1.0 1.0 6.4 6.2 7.7 8.2 2.6 2.8 69.3

Central Japan Rai lway 9022 JP BUY 22,947 11200 10.0 12.9 1.3 1.2 6.3 6.1 12.2 10.9 1.0 1.0 44.6

Kintetsu Corp 9041 JP Not Rated 7,148 420 31.6 32.8 3.3 3.1 18.5 17.8 11.4 11.9 1.2 1.0 67.4

Odakyu Elec Rai lway 9007 JP Neutral 7,257 990 37.1 44.0 3.1 2.9 16.2 15.9 14.1 77.9 0.8 0.8 60.3Japan Average 21.3 24.0 2.0 1.9 11.1 10.7 11.0 23.7 1.4 1.5 57.1Asia-pac Average 19.6 21.4 1.8 1.7 10.5 10.1 10.5 15.8 2.4 2.1 43.7


6/18


6

Where is the upside?

Further potential upside to our numbers from accretiveacquisitions

ComfortDelgro has been successful in growing its business with incremental bolt-on

acquisitions. Return on investments in Australia has been at a respectable ROI (pre-tax)

of 8.5%, higher than its mid single digit ROA (5+%).

We expect the group to continue making accretive acquisitions overseas, subject to

available targets at the right price. We have not factored these acquisitions into our

numbers and, as such, represent potential upside to our forecast. In an effort to quantify

the impact, we estimate that the incremental impact of acquisitions on earnings could go

up to 5% in the immediate period, subject to the acquisition size. We estimate that every

S$50mn worth of acquisition will add ~2.4S$cent to our TP (+1%).

Free opt ion on fare increase

We do not profess to have any insight as to whether a fare increase will materialise, but

choose to view it as an out-of-money option that comes free with the stock and which

could meaningfully contribute to earnings and valuations if it happens.

Every 1 S$cent increase in fares could add up to S$9.4mn to FY14 earnings and up to

~8S$cent to our TP (+4%). This is assuming that a similar fare increase quantum is

given for both rail and bus fares. We note that it is possible for the fare increase to be

different across bus and rail, which was the case back in 2007.

Fig. 6: Scenario analys is: Fare increase


Bus Fare increase 1 S$cent 2 S$cent 3 S$centBus ridership in FY14F ('mn) 999 999 999Revenue increase (S$'mn) 10.0 20.0 30.0100% passthrough to earnings (S$'mn) 10.0 20.0 30.0Earnings accretion, adjust for MI of 25% (S$'mn) 7.5 15.0 22.5

% impact on FY14F earnings 2.7% 5.4% 8.0%P/E Multiple (x) for SBST 17 17 17

Accretion to valuation (S$'mn) 127.4 254.7 382.1Accretion to TP (S$cent) 0.06 0.12 0.18

% impact on valuation 2.8% 5.5% 8.3%

Rail Fare increase 1 S$cent 2 S$cent 3 S$centRail Ridership in FY14F ('mn) 249 249 249Revenue increase (S$'mn) 2.5 5.0 7.5100% passthrough to earnings (S$'mn) 2.5 5.0 7.5Earnings accretion, adjust for MI of 25% (S$'mn) 1.9 3.7 5.6% impact on FY14F earnings 0.7% 1.3% 2.0%P/E Multiple (x) for SBST 17 17 17Accretion to valuation (S$'mn) 31.7 63.4 95.1Accretion to TP (S$cent) 0.02 0.03 0.05% impact on valuation 0.7% 1.4% 2.1%

Overall 1 S$cent 2 S$cent 3 S$centAccretion to earnings (S$'mn) 9.4 18.7 28.1% impact on FY14F earnings 3.3% 6.7% 10.0%Accretion to valuation (S$'mn) 159.1 318.1 477.2Accretion to TP (S$) 0.08 0.15 0.23% impact on valuation 3.5% 6.9% 10.4%


7/18


7

Downtown Line (DTL): Still a positiveWe revise our assumptions to assume a faster ramp-up in hiring prior to the opening of

the various phases of the Downtown Line, as the group hires ahead of requirements. We

note that the rate of hiring is a moving target as the group is similarly figuring out the

right pace and quantity of manpower needed for the operations. We also tweak our

average fare assumption downwards to be conservative on how much is achievable for

the distance travelled on the DTL.

Still a positive for earnings growth

Despite these adjustments, our revised numbers still show that the entire DTL will be

profitable by FY16F, which is in line with our original expectations albeit at a lower profit

level. Further, we note that even though the Downtown Line is likely to still be loss-

making up until FY16F, what matters is that the losses are reduced across time as the

lines begin to contribute. Consequently, this is a positive delta which is a positive for

earnings growth.

Fig. 7: Downtown Line projected profitability

Still breaking even by FY16F


Downtown Line Factors taken into considerat ion FY13F FY14F FY15F FY16F FY17F FY18F FY19F FY20F

Avg da ily ridersh ip in yr 37,50 0 82,50 0 132,500 265,000 370,000 642,5 00 707,5 00 742,8 75

Phase 1 - @end of period Assuming quick ramp-up in 1st 3yrs 75,0 00 9 0,0 00 100 ,00 0 105 ,000 1 10 ,000 1 15 ,0 00 1 20 ,0 00 1 26 ,0 00

Phase 2 - @end of period Growth tapers off and stabilise at 5% p.a. 150,000 175,000 200,000 210,000 220,000 231,000

Phase 3 - @end of period Growth rate slows further in later years 300,000 350,000 400,000 420,000

Avg da ily ridersh ip at end of yr 75,000 90,00 0 250,000 280,000 610,000 675,0 00 740,0 00 777,0 00

Ave Fare ($) Shorter route distance vs NEL 0.6 0.6 0.68 0.75 0.81 0.87 0.87 0.87

0 0 0 0 0 0 0 0

Rental space 25,834 25,834 35,521 35,521 150,696 150,696 150,696 150,696

rent $psf/mth In line with NEL's retail space 24 24 22 22 20 20 20 20

Rental income 0.4 6 7 8 11 25 36 36

Occupancy Assuming a ramp-up in leasing 20% 80% 75% 80% 31% 69% 100% 100%

Revenue - train 0.3 18.1 32.6 72.5 109.4 204.0 224.7 235.9

Revenue - rental & ad 0.4 6.0 7.1 7.5 11.3 25.1 36.2 36.2

Revenue (DTL) 0.7 24.0 39.7 80.0 120.7 229.1 260.8 272.1

License fees 0.0 0.0 0 0.0 0 40.0 50.0 60.0

License fees (annualised) 0.0 0.0 0 0.0 20.0 45.0 55.0 65.0

Op stats Phase 1 Phase 2 Phase 3

Fleet (3-cars) 8.0 24 41.0

Cumulat ive 8.0 8.0 32.0 32.0 73.0 73.0 73.0 73.0

Stations 6.0 12 16.0

Cumulat ive 6.0 6.0 18.0 18.0 34.0 34.0 34.0 34.0

Route Km 4.3 16.6 21.1

Cumulat ive 4.3 4.3 20.9 20.9 42.0 42.0 42.0 42.0

Timing gap/trip (min) Assuming frequency increases w time 5.0 4.8 4.6 4.2 4.0 3.6 3.5 3.4

# of trips/day (implied) 216.0 225.0 234.8 257.1 270.0 300.0 308.6 317.6

# of km travelled/day 929 968 4,907 5,374 11,340 12,600 12,960 13,341

Cost Phase 1 Phase 2 Phase 3

Staff # of stations & trains vs NEL 300 300 400

Cumulative # of staff Mgt guidance for Phase 1 400 600 700 1,000 1,000 1,030 1,061 1,082

Cost/employee (p.a.) Adjusting for economies of scale 0.048 0.049 0.050 0.051 0.052 0.053 0.054 0.055

Staff cost 14.400 14.982 20.783Staff cost - cumulative 15.6 24.5 35.0 43.3 52.0 54.6 57.3 59.7

Repair # of trains vs NEL Phase 1 Phase 2 Phase 3

Repair cost - (annualised) Adjusting for younger fleet 4.0 4.4 6.9 9.9 15.8 22.8 23.2 23.7

Electricity # of trips & # of stations vs NEL Phase 1 Phase 2 Phase 3

Electricity - (annualised) Adjusting for rolling stk efficiency 5.3 5.6 14.5 23.5 31.1 41.0 43.1 45.2

& NEL's economies of scale

Total cost (annualised) 24.9 34.4 56.3 76.7 98.8 118.4 123.6 128.6

Total cost (adjusted for startup t iming) 16.4 34.4 45.4 76.7 87.7 118.4 123.6 128.6

EBIT -15.7 -10.4 -5.7 3.4 12.9 65.7 82.2 78.5

EBIT (less rental) -16.0 -16.4 -12.7 -4.1 1.7 40.6 46.0 42.3


8/18


8

Earnings overview

Slight tweaks to our FY13F and FY14F earnings

We adjust our FY13F and FY14F earnings downwards by 1% and 3%, respectively. Key

changes involve a lower profit contribution for the DTL due to higher cost assumptions

and higher losses from the Singapore bus business due to ineffectiveness of bus

subsidies. We also pre-emptively pencil-in potentially lower Australian bus margins due

to re-tendering of routes.

Group continues to deliver decent growth

Despite these changes, the group continues to grow earnings at a decent clip of 6% (y-y)

in FY14F. This is in part because management has pre-emptively grown and replenished

lost earnings through acquisitions such as the acquisition of selected Firstgroup bus

assets in London. It is also partly because the DTL will commence and bring in revenues

to offset the start-up costs currently depressing rail profits.

We expect potential upside to our forecasts from more accretive acquisitions. We view a

fare increase, if any, as an out-of-the-money option which will give a kicker if it

materialises.

Segment out look

Overall, we expect earnings growth across the forecast period to remain in line with

historical growth rates (10-year CAGR of 6.6%). FY14F will be driven by full-year

earnings contribution from recent acquisitions and from the DTL as it commences

operations, and brings in revenues to offset the start-up costs currently depressing rail

profits. FY15F earnings will continue to be significantly driven by the rail segment.

The more immediate FY13F net profit should see earnings driven by continued growth in

the taxi operations, better performance in the rail segment and also the car rental and

driving business, offset by a continued drag from the Singapore bus business.

Contributions from recent acquisitions will also be reflected in 2HFY13F.

We expect the bus and taxi segment to remain key earnings contributors, with

automotive and vehicle inspection/testing next up in line and rail earnings increasing in

importance.

We believe acquisitions will be the key driver of the bus divisions earnings and to offset

a loss of bus routes in Australia, currency headwinds that both the UK and Australian

businesses face and continued losses in the Singapore bus segment.

On the taxi front, we expect Singapore and China to maintain its growth profile and offset

a contracting UK business suffering from the economic malaise. We anticipate growth

from Australia to be low due to economic headwinds in Australia.

We expect rail segment profits to contract further in FY13F due to start-up costs but to

pick up quite sharply in FY14F as the DTL ramps up and start contributing revenues to

offset the start-up costs. We expect the DTL to turn profitable by FY16F as the rate ofincrease in revenues outpaces the rate of growth in costs.

Growth in earnings for the vehicle inspection/testing business remains one of the

outperformers in the group. However, we expect the long-term growth profile to be lower

than historical experience (8% v >10% previously) due to slower vehicular growth in

Singapore and a maturing growth profile for the testing business, after growing from a

small base.

Automotive segment earnings have historically been quite volatile due to the inclusion of

diesel sales within the segment. The historical variance in EBIT growth rate has been

20+% in either direction and has largely been driven by movement in oil prices and

diesel sales margins. The underlying engineering and repair business is generally stable

and exhibit a low single digit growth rate. We have assumed a normalised growth rate in


9/18


9

our forecasts, though the volatile nature of automotive earnings may cause surprises on

the upside/downside. EBIT margins in FY13F will improve as they close down their car

distribution business in China, which is mildly unprofitable and a low margin business to

begin with.

We expect growth for its bus station in China to continue growing at a modest pace,

while growth for the driving centre business in FY13F should be good due to strong cost

control and steady growth in enrolment. Separately, we think the car rental business will

continue to see modest growth across the forecast period. Contributions from these

three segments combined is


10/18


10

Fig. 8: Segment breakdown


FY07A FY08A FY09A FY10A FY11A FY12F FY13F FY14F FY15F

Bus

Revenues 1537.0 1532.8 1530.9 1612.2 1684.1 1719.7 1864.0 2013.3 2051.2

% growth 11.9% -0.3% -0.1% 5.3% 4.5% 2.1% 8.4% 8.0% 1.9%

EBIT 132.7 96.3 123.9 149.2 145.0 145.6 153.8 162.1 155.9

% growth 4% -27% 29% 20% -3% 0% 6% 5% -4%

EBIT mrgns 8.6% 6.3% 8.1% 9.3% 8.6% 8.5% 8.3% 8.1% 7.6%

Bus Station

Revenues 17.9 19.4 21.4 22.7 23.9 25.7 27.5 29.1 30.6

% growth 14.0% 8.4% 10.3% 6.1% 5.3% 7.5% 7.0% 6.0% 5.0%

EBIT 7.9 10.1 10.3 10.6 10.8 11.4 12.4 13.1 13.8

% growth 10% 28% 2% 3% 2% 6% 9% 6% 5%

EBIT mrgns 44.1% 52.1% 48.1% 46.7% 45.2% 44.4% 45.0% 45.0% 45.0%

Rail

Revenues 90.5 110.5 119.7 134.4 147.0 153.2 163.9 197.7 224.5

% growth 18.1% 22.1% 8.3% 12.3% 9.4% 4.2% 7.0% 20.6% 13.6%

EBIT 9.2 16.7 20.5 25.6 27.7 14.3 10.3 19.1 25.3

% growth 1433% 82% 23% 25% 8% -48% -28% 85% 32%

EBIT mrgns 10.2% 15.1% 17.1% 19.0% 18.8% 9.3% 6.3% 9.7% 11.3%

EBIT (excl DTL) 27.7 24.3 26.0 29.5 31.0

% growth 8% 7% 5% 5%

TaxiRevenues 917.3 945.3 927.6 981.9 1039.2 1120.5 1183.9 1245.0 1301.2

% growth 5.9% 3.1% -1.9% 5.9% 5.8% 7.8% 5.0% 5.0% 5.0%

EBIT 121.2 102.1 105.2 119.3 129.6 140.1 149.7 157.8 166.3

% growth 12% -16% 3% 13% 9% 8% 7% 5% 5%

EBIT mrgns 13.2% 10.8% 11.3% 12.1% 12.5% 12.5% 12.6% 12.7% 13.0%

Diesel sales

Revenues 192.2 253.5

% growth -8.4% 31.9%

EBIT 8.1 0.0

% growth -38% -100%

EBIT mrgns 4.2% 0.0%

Auto motive Eng ineering

Revenues 97.8 92.6 307.4 300.1 351.6 354.9 365.5 383.8 403.0

% growth -5.6% -5.3% 232.0% -2.4% 17.2% 0.9% 3.0% 5.0% 5.0%

EBIT 22.2 16.9 51.2 39.1 37.5 51.2 49.3 51.8 52.4

% growth -3% -24% 203% -24% -4% 37% -4% 5% 1%

EBIT mrgns 22.7% 18.3% 16.7% 13.0% 10.7% 14.4% 13.5% 13.5% 13.0%

Vehicle inspection/testing

Revenues 62.4 72.7 77.3 83.7 90.9 97.8 105.1 113.0 121.5

% growth 14.1% 16.5% 6.3% 8.3% 8.6% 7.6% 7.5% 7.5% 7.5%

EBIT 15.4 19.8 24.7 27.3 30.7 32.6 35.3 38.1 41.2

% growth 22% 29% 25% 11% 12% 6% 8% 8% 8%

EBIT mrgns 24.7% 27.2% 32.0% 32.6% 33.8% 33.3% 33.5% 33.7% 33.9%

Car rental & leasing

Revenues 36.1 37.0 33.3 33.6 35.4 35.5 36.2 36.9 37.7

% growth -1.4% 2.5% -10.0% 0.9% 5.4% 0.3% 2.0% 2.0% 2.0%

EBIT 6.7 6.9 4.4 5.9 7.3 8.9 9.4 9.6 9.8% growth -8% 3% -36% 34% 24% 22% 6% 2% 2%

EBIT mrgns 18.6% 18.6% 13.2% 17.6% 20.6% 25.1% 26.0% 26.0% 26.0%

Driving centre

Revenues 29.6 33.5 34.2 38.3 39.0 38.0 39.2 40.4 41.6

% growth 21.3% 13.2% 2.1% 12.0% 1.8% -2.6% 3.0% 3.0% 3.0%

EBIT 7.2 9.2 9.7 11.4 10.6 8.2 9.8 10.1 10.4

% growth 22% 28% 5% 18% -7% -23% 19% 3% 3%

EBIT mrgns 24.3% 27.5% 28.4% 29.8% 27.2% 21.6% 25.0% 25.0% 25.0%

Others 4.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Total EBIT 334.8 278.0 349.9 388.4 399.2 412.3 430.0 461.7 475.1

EBIT growth % 10% -17% 26% 11% 3% 3% 4% 7% 3%

EBIT mrgns % 11.1% 8.9% 11.5% 12.1% 11.7% 11.6% 11.4% 11.4% 11.3%

Have since been subsumed into the

automotive engineering segment


11/18


11

Fig. 9: FY13F EBIT contribu tion by segment


Fig. 10: FY15F EBIT cont ribu tion by segment


35.8%

2.9%2.4%

34.8%

11.5%

8.2%2.2% 2.3%

Bus Bus station Rail Taxi

Automotive Engineering Vehicle inspection/testing Car rental & leasing Driving Centre

32.8%

2.9%

5.3%35.0%

11.0%

8.7%2.1% 2.2%

Bus Bus station Rail Taxi

Automotive Engineering Vehicle inspection/testing Car rental & leasing Driving Centre


12/18


12

Key Risks

Loss of Australian bus contracts

There is a risk that the group may lose the re-tender for a major bus route in New South

Wales (NSW), Australia. This is on the back of a recent loss of two existing bus routes in

NSW in a re-tendering exercise. We estimate that the loss of the major bus route could

impact FY14F/15F earnings by close to 3% (after adjusting for its 51% stake in the

Australian bus operations), depending on the handover timing of the bus routes in theevent of a loss. We have currently assumed that they would win the re-tender but at a

lower EBIT margin of 8% (current EBIT margin: 18 19%).

Higher-than-expected losses on DTL

The DTL could see losses run deeper and longer if ridership numbers and average fares

are below expectations. A slower leasing rate or lower rental rates for its retail space,

together with higher cost pressures, could also cause the DTL to be less profitable than

our expectations.

Regulatory changes

In 2013, the Singapore government will release its new Land Transport Masterplan

which will outline the governments key strategic thrusts for the sector over the next five

years. We could see further tightening of the regulatory environment, which might

depress the profitability of public transport operators, including ComfortDelgro, which

generates ~50% of its earnings from Singapore.

NEL breakdown

The NEL is entering into its 10th year of operations and has seen a greater frequency of

breakdowns that have been put under the public spotlight. We are already seeing the

group spending more on repair and maintenance to raise service reliability. The concern

is that further breakdowns could lead to an upgrading plan that could require significant

capex outlay which would depress profitability and cashflows.

Currency headwinds

Though operational performance of overseas operations has been commendable, their

contribution to the groups growth have been weakened by a stronger SGD. We estimate

that a stronger SGD, based on Nomuras forex forecasts, can potentially shave 1-3% off

earnings growth on the EBIT level.

Higher oil prices

Even though fuel and electricity costs make up only ~10% of the groups cost base, it

has been a significant drag on earnings in the recent years due to high oil prices. If oilprices go up higher, we could see a reduction in our growth estimates. We estimate that

a 1% change in oil prices has a 90% pass-through effect to the bottom line.

Higher staff cost

Given the tight labour market in Singapore, the group may have difficulty fulfilling their

manpower needs at a reasonable cost, especially since they are expanding their bus and

rail operations in Singapore. Furthermore, there has been an increased focus on raising

the wages of lower income employees in Singapore, which may affect the group. Staff

cost currently make up close to 40% of the groups cost base.


13/18


13

Key Catalysts

Higher d ividends

Viewed as a defensive yield stock, a higher dividend payment could cause the stock to

re-rate. With its payout ratio at only 50%, the group can pay out more of its growing

profits. A robust balance sheet with near-zero gearing also provide room for higher

dividend through capital management.

Higher average fares; longer average travelling distance

The fare formula review and the subsequent fare review in 2Q/3QFY13 could see higher

fare levels. Average fares could also increase on the back of longer average travelling

distance by commuters. Such increases will be positive for the bottom line as it will be

amplified by the high operating leverage effect.

Better-than-expected performance of Downtown Line

Lower-than-expected losses on the DTL, when it commences operations in 4QFY13, will

alleviate fears of it being a drag on earnings for multiple years. With the overhang of fear

removed, we could see the stock re-rate.

Subsidies & grants

Better-than-expected subsidies for the bus segment would be a key contributor to better

earnings and cashflows.

Change in Singapore bus framework

A game changer could come if the government, through its review of the Land Transport

Masterplan, decides that a cost-plus model will be more suited for managing bus

operations in Singapore. A cost-plus model will potentially be more rewarding for

operators as they are rewarded based on what they can control costs and as such,

the bus segment could see a reversal of its losses.

Better cost contro l

With electricity/diesel cost being one of the main drag on earnings, lower oil prices would

be beneficial. Similar benefits could be achieved with well placed fuel/electricity hedges.

Higher productivity and a slower expansion in headcount could see cost increase being

slower than expected, which would be a positive for earnings.

M&A

New accretive acquisitions would be viewed favourably and could cause the stock to

rerate, depending on the deal size and impact on the bottom line.

Shift to new rail financing framework

ComfortDelgro could potentially shift its existing rail operating license to the new regime

which is currently applied to the new Downtown Line. Under the new Downtown Line

regime, the operator will not be required to fund replacement assets. The quid pro quo

will be a shorter license period and possibly, a higher annual license fee. The new

regime will eliminate cashflow uncertainty revolving around capex and potentially lead to

higher valuations. However, a shorter operating license period and a possibly higher

annual license fee may be taken negatively, and the outcome is therefore mixed and

likely to be dependent on the specific details of the arrangement.


14/18


14

Appendix A-1

Analyst Cert ificat ion

I, Wen Jie Chan, hereby certify (1) that the views expressed in this Research report accurately reflect my personal views about

any or all of the subject securities or issuers referred to in this Research report, (2) no part of my compensation was, is or will be

directly or indirectly related to the specific recommendations or views expressed in this Research report and (3) no part of my

compensation is tied to any specific investment banking transactions performed by Nomura Securities International, Inc.,

Nomura International plc or any other Nomura Group company.

Issuer Specific Regulatory Disclosures

The term "Nomura Group" used herein refers to Nomura Holdings, Inc. or any of its affiliates or subsidiaries, and may refer to one or more

Nomura Group companies.

Materially mentioned issuers

Issuer Ticker Price Price date Stock rating Sector rating Disclosures

ComfortDelGro Corp CD SP SGD 1.90 31-May-2013 Buy Not rated

ComfortDelGro Corp (CD SP) SGD 1.90 (31-May-2013)

Rating and target price chart (three year history)

Buy (Sector rating: Not rated)

Date Rating Target price Closing price

23-Jan-13 2.13 1.87

23-Nov-12 1.86 1.66

07-Sep-11 1.72 1.35

21-Jan-11 Buy 1.62

21-Jan-11 1.98 1.62

For explanation of ratings refer to the stock rating keys located after chart(s)

Valuation Methodology Our target price of SGD2.19 is based on our SOTP valuations of the different segments within thegroup, using blended FY13/14F EPS.

Risks that may impede the achievement of the target priceKey risks: loss of Australian bus contracts; slower-than-expectedramp-up of DTL; NEL breakdown; regulatory changes; currency headwinds; higher oil price; higher staff cost


15/18


15

Important DisclosuresOnline availability of research and conflict-of-interest disclosuresNomura research is available on www.nomuranow.com/research, Bloomberg, Capital IQ, Factset, MarkitHub, Reuters and ThomsonOne.Important disclosures may be read at http://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspxor requestedfrom Nomura Securities International, Inc., on 1-877-865-5752. If you have any difficulties with the website, pleaseemail [email protected] help.The analysts responsible for preparing this report have received compensation based upon various factors including the firm's total revenues, aportion of which is generated by Investment Banking activities. Unless otherwise noted, the non-US analysts listed at the front of this report arenot registered/qualified as research analysts under FINRA/NYSE rules, may not be associated persons of NSI, and may not be subject toFINRA Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public appearances, and trading securities heldby a research analyst account.Nomura Global Financial Products Inc. (NGFP) Nomura Derivative Products Inc. (NDPI) and Nomura International plc. (NIplc) areregistered with the Commodities Futures Trading Commission and the National Futures Association (NFA) as swap dealers. NGFP, NDPI, andNIplc are generally engaged in the trading of swaps and other derivative products, any of which may be the subject of this report.Any authors named in this report are research analysts unless otherwise indicated. Industry Specialistsidentified in some Nomura Internationalplc research reports are employees within the Firm who are responsible for the sales and trading effort in the sector for which they havecoverage. Industry Specialists do not contribute in any manner to the content of research reports in which their names appear. Marketing

Analystsidentified in some Nomura research reports are research analysts employed by Nomura International plc who are primarily responsiblefor marketing Nomuras Equity Research product in the sector for which they have coverage. Marketing Analysts may also contribute toresearch reports in which their names appear and publish research on their sector.Distribution of ratings (Global)The distribution of all ratings published by Nomura Global Equity Research is as follows:

43% have been assigned a Buy rating which, for purposes of mandatory disclosures, are classified as a Buy rating; 40% of companies with thisrating are investment banking clients of the Nomura Group*.46% have been assigned a Neutral rating which, for purposes of mandatory disclosures, is classified as a Hold rating; 48% of companies withthis rating are investment banking clients of the Nomura Group*.11% have been assigned a Reduce rating which, for purposes of mandatory disclosures, are classified as a Sell rating; 23% of companies withthis rating are investment banking clients of the Nomura Group*.As at 31 March 2013. *The Nomura Group as defined in the Disclaimer section at the end of this report.Explanation of Nomura's equity research rating system in Europe, Middle East and Africa, US and Latin America The rating system is a relative system indicating expected performance against a specific benchmark identified for each individual stock.Analysts may also indicate absolute upside to target price defined as (fair value - current price)/current price, subject to limited managementdiscretion. In most cases, the fair value will equal the analyst's assessment of the current intrinsic fair value of the stock using an appropriatevaluation methodology such as discounted cash flow or multiple analysis, etc.STOCKSA rating of 'Buy',indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of 'Neutral',indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of 'Reduce', indicates thatthe analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of 'Suspended', indicates that the rating, targetprice and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies in certain circumstancesincluding, but not limited to, when Nomura is acting in an advisory capacity in a merger or strategic transaction involving the company.Benchmarks are as follows: United States/Europe: please see valuation methodologies for explanations of relevant benchmarks for stocks,which can be accessed at: http://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspx; Global EmergingMarkets (ex-Asia):MSCI Emerging Markets ex-Asia, unless otherwise stated in the valuation methodology.SECTORSA 'Bullish'stance, indicates that the analyst expects the sector to outperform the Benchmark during the next 12 months. A 'Neutral'stance,indicates that the analyst expects the sector to perform in line with the Benchmark during the next 12 months. A 'Bearish' stance, indicates thatthe analyst expects the sector to underperform the Benchmark during the next 12 months. Benchmarks are as follows: United States: S&P 500;Europe: Dow Jones STOXX 600; Global Emerging Markets (ex-Asia): MSCI Emerging Markets ex-Asia.Explanation of Nomura's equity research rating system in Japan and Asia ex-Japan STOCKSStock recommendations are based on absolute valuation upside (downside), which is defined as (Target Price - Current Price) / Current Price,subject to limited management discretion. In most cases, the Target Price will equal the analyst's 12-month intrinsic valuation of the stock,based on an appropriate valuation methodology such as discounted cash flow, multiple analysis, etc. A 'Buy'recommendation indicates thatpotential upside is 15% or more. A 'Neutral'recommendation indicates that potential upside is less than 15% or downside is less than 5%. A'Reduce'recommendation indicates that potential downside is 5% or more. A rating of 'Suspended'indicates that the rating and target pricehave been suspended temporarily to comply with applicable regulations and/or firm policies in certain circumstances including when Nomura isacting in an advisory capacity in a merger or strategic transaction involving the subject company. Securities and/or companies that are labelledas 'Not rated'or shown as 'No rating'are not in regular research coverage of the Nomura entity identified in the top banner. Investors shouldnot expect continuing or additional information from Nomura relating to such securities and/or companies.SECTORSA 'Bullish'rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a positiveabsolute recommendation. A 'Neutral'rating means most stocks in the sector have (or the weighted average recommendation of the stocksunder coverage is) a neutral absolute recommendation. A 'Bearish' rating means most stocks in the sector have (or the weighted average

recommendation of the stocks under coverage is) a negative absolute recommendation.
http://www.nomuranow.com/researchhttp://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspxmailto:[email protected]://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspxhttp://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspxmailto:[email protected]://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspxhttp://www.nomuranow.com/research


16/18


16

Target PriceA Target Price, if discussed, reflects in part the analyst's estimates for the company's earnings. The achievement of any target price may beimpeded by general market and macroeconomic trends, and by other risks related to the company or the market, and may not occur if thecompany's earnings differ from estimates.


17/18


17

DisclaimersThis document contains material that has been prepared by the Nomura entity identified at the top or bottom of page 1 herein, if any, and/or, with the sole or jointcontributions of one or more Nomura entities whose employees and their respective affiliations are specified on page 1 herein or identified elsewhere in thedocument. The term "Nomura Group" used herein refers to Nomura Holdings, Inc. or any of its affiliates or subsidiaries and may refer to one or more Nomura Groupcompanies including: Nomura Securities Co., Ltd. ('NSC') Tokyo, Japan; Nomura International plc ('NIplc'), UK; Nomura Securities International, Inc. ('NSI'), NewYork, US; Nomura International (Hong Kong) Ltd. (NIHK), Hong Kong; Nomura Financial Investment (Korea) Co., Ltd. (NFIK), Korea (Information on Nomuraanalysts registered with the Korea Financial Investment Association ('KOFIA') can be found on the KOFIA Intranet at http://dis.kofia.or.kr); Nomura Singapore Ltd.(NSL), Singapore (Registration number 197201440E, regulated by the Monetary Authority of Singapore); Nomura Australia Ltd. (NAL), Australia (ABN 48 003 032513), regulated by the Australian Securities and Investment Commission ('ASIC') and holder of an Australian financial services licence number 246412; P.T. NomuraIndonesia (PTNI), Indonesia; Nomura Securities Malaysia Sdn. Bhd. (NSM), Malaysia; NIHK, Taipei Branch (NITB), Taiwan; Nomura Financial Advisory andSecurities (India) Private Limited (NFASL), Mumbai, India (Registered Address: Ceejay House, Level 11, Plot F, Shivsagar Estate, Dr. Annie Besant Road, Worli,Mumbai- 400 018, India; Tel: +91 22 4037 4037, Fax: +91 22 4037 4111; SEBI Registration No: BSE INB011299030, NSE INB231299034, INF231299034, INE231299034, MCX: INE261299034) and NIplc, Madrid Branch (NIplc, Madrid). CNS Thailand next to an analysts name on the front page of a research report

indicates that the analyst is employed by Capital Nomura Securities Public Company Limited (CNS) to provide research assistance services to NSL under aResearch Assistance Agreement. CNS is not a Nomura entity.THIS MATERIAL IS: (I) FOR YOUR PRIVATE INFORMATION, AND WE ARE NOT SOLICITING ANY ACTION BASED UPON IT; (II) NOT TO BE CONSTRUEDAS AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY IN ANY JURISDICTION WHERE SUCH OFFER OR SOLICITATIONWOULD BE ILLEGAL; AND (III) BASED UPON INFORMATION FROM SOURCES THAT WE CONSIDER RELIABLE, BUT HAS NOT BEEN INDEPENDENTLYVERIFIED BY NOMURA GROUP.Nomura Group does not warrant or represent that the document is accurate, complete, reliable, fit for any particular purpose or merchantable and does not acceptliability for any act (or decision not to act) resulting from use of this document and related data. To the maximum extent permissible all warranties and otherassurances by Nomura group are hereby excluded and Nomura Group shall have no liability for the use, misuse, or distribution of this information.Opinions or estimates expressed are current opinions as of the original publication date appearing on this material and the information, including the opinions andestimates contained herein, are subject to change without notice. Nomura Group is under no duty to update this document. Any comments or statements madeherein are those of the author(s) and may differ from views held by other parties within Nomura Group. Clients should consider whether any advice orrecommendation in this report is suitable for their particular circumstances and, if appropriate, seek professional advice, including tax advice. Nomura Group doesnot provide tax advice.Nomura Group, and/or its officers, directors and employees, may, to the extent permitted by applicable law and/or regulation, deal as principal, agent, or otherwise,or have long or short positions in, or buy or sell, the securities, commodities or instruments, or options or other derivative instruments based thereon, of issuers orsecurities mentioned herein. Nomura Group companies may also act as market maker or liquidity provider (within the meaning of applicable regulations in the UK) inthe financial instruments of the issuer. Where the activity of market maker is carried out in accordance with the definition given to it by specific laws and regulations

of the US or other jurisdictions, this will be separately disclosed within the specific issuer disclosures.This document may contain information obtained from third parties, including ratings from credit ratings agencies such as Standard & Poors. Reproduction anddistribution of third party content in any form is prohibited except with the prior written permission of the related third party. Third party content providers do notguarantee the accuracy, completeness, timeliness or availability of any information, including ratings, and are not responsible for any errors or omissions (negligentor otherwise), regardless of the cause, or for the results obtained from the use of such content. Third party content providers give no express or implied warranties,including, but not limited to, any warranties of merchantability or fitness for a particular purpose or use. Third party content providers shall not be liable for any direct,indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including lost income or profits andopportunity costs) in connection with any use of their content, including ratings. Credit ratings are statements of opinions and are not statements of fact orrecommendations to purchase hold or sell securities. They do not address the suitability of securities or the suitability of securities for investment purposes, andshould not be relied on as investment advice.Any MSCI sourced information in this document is the exclusive property of MSCI Inc. (MSCI). Without prior written permission of MSCI, this information and anyother MSCI intellectual property may not be reproduced, re-disseminated or used to create any financial products, including any indices. This information is providedon an "as is" basis. The user assumes the entire risk of any use made of this information. MSCI, its affiliates and any third party involved in, or related to, computingor compiling the information hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose withrespect to any of this information. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in, or related to,computing or compiling the information have any liability for any damages of any kind. MSCI and the MSCI indexes are services marks of MSCI and its affiliates.Investors should consider this document as only a single factor in making their investment decision and, as such, the report should not be viewed as identifying orsuggesting all risks, direct or indirect, that may be associated with any investment decision. Nomura Group produces a number of different types of research productincluding, among others, fundamental analysis, quantitative analysis and short term trading ideas; recommendations contained in one type of research product may

differ from recommendations contained in other types of research product, whether as a result of differing time horizons, methodologies or otherwise. Nomura Grouppublishes research product in a number of different ways including the posting of product on Nomura Group portals and/or distribution directly to clients. Differentgroups of clients may receive different products and services from the research department depending on their individual requirements. Clients outside of the USmay access the Nomura Research Trading Ideas platform (Retina) at http://go.nomuranow.com/equities/tradingideas/retina/Figures presented herein may refer to past performance or simulations based on past performance which are not reliable indicators of future performance. Wherethe information contains an indication of future performance, such forecasts may not be a reliable indicator of future performance. Moreover, simulations are basedon models and simplifying assumptions which may oversimplify and not reflect the future distribution of returns.Certain securities are subject to fluctuations in exchange rates that could have an adverse effect on the value or price of, or income derived from, the investment.The securities described herein may not have been registered under the US Securities Act of 1933 (the 1933 Act), and, in such case, may not be offered or sold inthe US or to US persons unless they have been registered under the 1933 Act, or except in compliance with an exemption from the registration requirements of the1933 Act. Unless governing law permits otherwise, any transaction should be executed via a Nomura entity in your home jurisdiction.This document has been approved for distribution in the UK and European Economic Area as investment research by NIplc. NIplc is authorised by the PrudentialRegulation Authority (PRA), regulated by the Financial Conduct Authority and the PRA, and is a member of the London Stock Exchange. This document does notconstitute a personal recommendation within the meaning of applicable regulations in the UK, or take into account the particular investment objectives, financialsituations, or needs of individual investors. This document is intended only for investors who are 'eligible counterparties' or 'professional clients' for the purposes ofapplicable regulations in the UK, and may not, therefore, be redistributed to persons who are 'retail clients' for such purposes. This document has been approved byNIHK, which is regulated by the Hong Kong Securities and Futures Commission, for distribution in Hong Kong by NIHK. This document has been approved fordistribution in Australia by NAL, which is authorized and regulated in Australia by the ASIC. This document has also been approved for distribution in Malaysia by

NSM. In Singapore, this document has been distributed by NSL. NSL accepts legal responsibility for the content of this document, where it concerns securities,futures and foreign exchange, issued by their foreign affiliates in respect of recipients who are not accredited, expert or institutional investors as defined by theSecurities and Futures Act (Chapter 289). Recipients of this document in Singapore should contact NSL in respect of matters arising from, or in connection with, thisdocument. Unless prohibited by the provisions of Regulation S of the 1933 Act, this material is distributed in the US, by NSI, a US-registered broker-dealer, whichaccepts responsibility for its contents in accordance with the provisions of Rule 15a-6, under the US Securities Exchange Act of 1934.This document has not been approved for distribution to persons other than Authorised Persons, Exempt Persons or Institutions (as defined by the CapitalMarkets Authority) in the Kingdom of Saudi Arabia (Saudi Arabia) or to clients other than 'professional clients' (as defined by the Dubai Financial Services Authority)in the United Arab Emirates (UAE) by Nomura Saudi Arabia, NIplc or any other member of Nomura Group, as the case may be. Neither this document nor any copythereof may be taken or transmitted or distributed, directly or indirectly, by any person other than those authorised to do so into Saudi Arabia or in the UAE or to anyperson other than Authorised Persons, Exempt Persons or Institutions located in Saudi Arabia or to clients other than 'professional clients' in the UAE. Byaccepting to receive this document, you represent that you are not located in Saudi Arabia or that you are an Authorised Person, an Exempt Person or anInstitution in Saudi Arabia or that you are a 'professional client' in the UAE and agree to comply with these restrictions. Any failure to comply with these restrictionsmay constitute a violation of the laws of the UAE or Saudi Arabia.NO PART OF THIS MATERIAL MAY BE (I) COPIED, PHOTOCOPIED, OR DUPLICATED IN ANY FORM, BY ANY MEANS; OR (II) REDISTRIBUTED WITHOUTTHE PRIOR WRITTEN CONSENT OF A MEMBER OF NOMURA GROUP. If this document has been distributed by electronic transmission, such as e-mail, thensuch transmission cannot be guaranteed to be secure or error-free as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, orcontain viruses. The sender therefore does not accept liability for any errors or omissions in the contents of this document, which may arise as a result of electronictransmission. If verification is required, please request a hard-copy version.Nomura Group manages conflicts with respect to the production of research through its compliance policies and procedures (including, but not limited to, Conflicts of

Interest, Chinese Wall and Confidentiality policies) as well as through the maintenance of Chinese walls and employee training.
http://dis.kofia.or.kr/http://go.nomuranow.com/equities/tradingideas/retina/http://go.nomuranow.com/equities/tradingideas/retina/http://go.nomuranow.com/equities/tradingideas/retina/http://dis.kofia.or.kr/


18/18


Add iti onal inf orm atio n is avail able upon requ est and di scl osu re in for mati on i s avai labl e at the No mur a Disc los ure w ebpage:http://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspxCopyright 2013 Nomura International (Hong Kong) Ltd.. All rights reserved.
http://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspxhttp://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspx

Documents

ComfortDelgro - TP Upgrade