What will ComfortDelGro get from its recent acquisition in Australia?

Up to an additional $13m will be added to its profit next year.

Transport group ComfortDelGro seemed to have extra cash to spare as it eyes to acquire 49% stake in ComfortDelGro Cabcharge from its partner, Cabcharge Australia for around $196m in cash.

According to RHB Research, the management stated that the cash consideration would be funded through combination of internal funds and bank borrowings.

"However, we believe there is enough funds on ComfortDelGro’s balance sheet to fund the acquisition fully in cash, while maintaining an increasing dividend payout ratio," the research firm noted.

ComfortDelGro Cabcharge, which operates contract scheduled bus, school bus, private contract and charter bus services in Australia, has a total of 1, 712 buses and a manpower composing of 2,300 staff. RHB believes this could beef up the group's profits next year, adding $12m to $13m to its profit. This is assuming that the target company's net margin remains unchanged.

"Acquisitions, similar to the one just announced, could further boost earnings growth despite an uncertain economic environment," the brokerage firm stressed.

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