His target price of $1.75 represents a 24% upside to CDG’s share price of $1.41 as at the close of May 29. It also represents a dividend yield estimate of 6%.
In his May 30 report, Jaiswal highlights several positives including CDG’s plan to bid for Melbourne’s metro system from 2027, as part of its broader strategy to expand internationally.
“Forming the Melbourne One Rail Consortium with East Japan Railway, UGL, and Marubeni Corporation, CDG seeks to harness its established expertise from managing metro lines,” the analyst notes.
The Melbourne metro is currently operated by a joint venture (JV) led by Hong Kong’s MTR. The system will bring about annual revenue potential of over $2 billion, representing a “significant commercial potential”.
“A successful bid would enable CDG to expand its well-established presence in Australia, where it already operates buses and the country’s largest taxi fleet,” says Jaiswal. “This strategic move would deliver operational synergies, elevate service standards, and reinforce its standing as a competitive global transport operator.”
In Singapore, CDG’s advertising arm, Moove Media, won the tender from the Land Transport Authority (LTA) to manage advertisements on public buses, terminals and interchanges across the island.
The tender is for a period of seven years beginning from Nov 1 and will make Moove Media the only operator for bus advertising in the country.
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Before the contract win, Moove Media and SMRT Corp’s Stellar Ace were the only two advertising operators in this space.
“This consolidation of bus advertising under a single operator is aimed at increasing non-fare revenue and operational efficiency,” Jaiswal explains.
Moove Media has committed to pay $150 million in concession fees over the term.
While the new contracts and improved long-term pricing power will benefit CDG, the concession fee is expect to offset any near-term earnings upside, Jaiswal observes.
On May 30, CDG announced changes to its board committees, including the formation of a new board risk committee (BRC). The new BRC will oversee and look after CDG’s enterprise risk management framework, including the identification, assessment, monitoring and mitigation of material risks across the group.
The dedicated committee also sees to enhance the group’s effectiveness of its risk governance, ensure more in-depth discussions on risk-related matters and support CDG in navigating an evolving risk landscape, says the group.
At the same time, CDG’s existing audit and risk committee will be renamed the audit committee (AC), which continues to oversee the group’s financial reporting processes. The AC will also assess the adequacy and effectiveness of internal controls and risk management systems.
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“This restructuring of board committees allows for greater clarity and delineation of responsibilities between the BRC and the AC, and aligns with prevailing corporate governance practices,” says CDG.
Mark Christopher Greaves remains as the group’s independent, non-executive chairman of the board while Cheng Siak Kian is still the group’s managing director and group CEO.
Choi Shing Kwok, the board deputy chairman, will head the new BRC. The rest of its members include Jessica Cheam, Lee Jee Cheng Philip, Professor Ooi Beng Chin and Tham Ee Mern Lilian.
Lee will chair the AC, overseeing members Russell Stephen Balding, Cheam and Tham.
As at 4.55pm, shares in CDG are trading 2 cents higher or 1.42% up at $1.43.
