Why ComfortDelGro isn't badly hurt by Singapore Labour Foundation's sell-down

It's actually stabilising now.

According to OCBC, ComfortDelgro’s (CDG) is showing signs of stabilising after the partial stake sale by the Singapore Labour Foundation about a month ago (at its lowest, CDG fell by more than 20% from when the sale was completed).

At this juncture, analysts believe that it is a good opportunity to pick-up a high-quality counter on the cheap and, potentially, on the rebound.

Here's more from OCBC:

Domestic challenges aside, the group’s overseas growth prospects, which have been its key growth driver, remain unchanged. As a recap, CDG recently made an acquisition for its UK operations that expanded its fleet size by 41% - along with additional service routes – and increased its market share to joint-second in the city. This deal should become income accretive beyond FY13.

In addition, CDG is in the process of tendering for additional bus routes in New South Wales (Australia) – as well as re-submitting its bid for its existing routes - and we are hopeful for positive results come Jul this year.

More importantly, its UK and Australian bus segments are operated on a cost-plus model, which significantly limits its downside risks.

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