Here's why ComfortDelGro is better off than SMRT

SMRT has expeditures to rectify.

Maybank Kim Eng prefers ComfortDelGro to SMRT for its global business operations which provide growth opportunities beyond the challenges currently posed by the Singapore land transport scene.

Here's more from Maybank Kim Eng:

CDG's overseas businesses which include longer-term contracts with cost indexation provide stable earnings to support its dividend yields. A significant event for 2013 would be the announcement of the fare revision formula where the public transport operators look forward to a formula which better tracks cost inflation.

SMRT continues to be hit by numerous ‘deep-seated issues’ which require further expenditure to rectify: maintenance, staff cost and human resource initiatives. We forecast a cut in SMRT’s dividend payouts to fund these improvements – with SMRT’s stable dividend yields a thing of the past, we see no reason to own the stock and advocate a switch to CDG for investors still looking for exposure to land transport.

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