• Keep BUY and SGD1.70 TP (21% upside), 6% FY25F yield. ComfortDelGro's JV with RATP Dev will bid for the Copenhagen metro system's operation and maintenance (O&M) contract. We believe it is too early to assess the earnings impact as the tender for this contract will be published on 30 Jun 2025, with the final contract to be signed in Aug 2026. The contract is expected to begin in Sep 2027. We reiterate our positive outlook on CD as we expect earnings growth momentum to sustain in the quarters ahead.
• The Copenhagen metro system contract includes the O&M of the M1+M2 and M3+M4 metro lines. The metro has 44 stations and carried 126m passengers in 2024. As per this source, which provides the detailed timeline of the contract tendering process, on 30 Jun 2025, a contract notice will be published, where potential operators can apply to be prequalified. The Copenhagen Metro will prequalify four tenders that will be invited to submit a proposal for the full process. The entire process is expected to culminate with the signing of the final contract of the winning bidder in Aug 2026 and the commencement of the contract in Sep 2027. The metro system's current operator reported DKK74m (cSGD14m) of net profit in 2023 with a net margin of 7.1%, and is expecting to report PAT of DKK60-65m (c.SGD11-12m) in 2024. In addition to the M1+M2 and M3+M4 metro lines, the current operator also has an O&M contract for the Ring 3 Light Rail, which is expected to start operations in 2025.
• Growth through partnerships. The Copenhagen metro's latest O&M contract marks the third time CD and RATP Dev are joining hands to bid to run a metro line. In 2023, CD won a contract to operate the southern sector of Paris' Line 15 for an initial term of six years as part of a consortium with RATP Dev and Alstom. In Nov 2024, a JV between SBS Transit (CD's subsidiary) and RATP Dev Asia Pacific (RATP Dev's subsidiary) was appointed the operator of the upcoming Jurong Region MRT Line (JRL) in Singapore.
• Strong 2024 rail ridership to support CD's growth. For 2024, CD reported a 4% YoY higher average daily rail ridership in Singapore, with numbers similar to that seen in 2019. We expect this growth momentum to be sustained in 2025. In addition, the 6% public transport fare increase that took effect on 28 Dec 2024 should support better rail earnings in 2025. CD's growth remains supported by the continued improvement in UK public transport margins, contributions from the Australian bus tender wins, and acquisition of Addison Lee in the UK. CD's 2025F dividend yield of >6% remains above market yield. Our TP includes a 6% ESG premium.

Source: RHB Research - 4 Feb 2025