ComfortDelGro's joint venture in Australia has won an eight-year bus contract worth A$200 million ($180.5 million).
The contract is to operate Outer Metropolitan Bus Service for Region 7 in New South Wales in an equal partnership with the current operator, Red Bus Services.
This deal is estimated to add 3-4% to the land transport operator's revenue from Australia, which contributed 18% of the company's overall turnover for FY2022 ended Dec 2022.
ComfortDelGro had earlier won two other contracts in Australia. The three contracts are worth some A$1.9 billion.
From the perspective of DBS Group Research, earnings contribution from this latest contract is "relatively immaterial" but a "good signal" that ComfortDelGro C52 is active and successful in gaining new contracts.
"We maintain our positive view on the counter on the back of our expectations that we will see sequential improvement in its operations and its attractive valuation," says DBS on July 4, as it maintains its "buy" call and $1.62 target price.
When ComfortDelGro reports its 1HFY2023 ended June results in mid-August, DBS expects y-o-y and q-o-q improvement on the back of easing energy prices and improved mobility.
ComfortDelGro shares closed July 4 unchanged at $1.18, and down 4.07% year to date.
