3 things that will drive ComfortDelGro's 6% earnings growth in FY2013

One catalyst is higher taxi rentals.

Here's more from Nomura:

Our TP has been lifted by a higher valuation for the taxi business. We value the taxi business at 19x FY13F (v.s. 15x FY13F) to reflect the improved prospects for its business following the sharp rise in COEs (with the potential for rental increases) and the potential of its taxi business to increase market share at the expense of its competition.

We also raise valuations for our UK bus business from 8x to 11x FY13F P/E to better reflect the defensive earnings profile and bring valuations in line with that applied by our UK counterpart. Separately, we include the value of its stake in Cabcharge Australia to reflect potential monetisation of its stake.

Catalysts: Higher taxi rentals; Fare increase; higher dividends
While we forecast earnings growth of 6% for FY2013F, we see prospects for this to surprise on the upside as the group expands its Singapore taxi fleet with the concomitant progress in rentals. In addition, there could be upside if a fare increase for its Singapore bus/rail operations materializes.

We also do not rule out the potential for higher dividends as the group moves into a net cash position.

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