Cabcharge Remains Overvalued Following Very Weak Result
We maintain our fair value estimate for no-moat-rated Cabcharge at AUD 1.60 per share following the very weak fiscal 2017 result. At the current market price of AUD 2.12, we believe the shares are materially overvalued. The fair-value-implied fiscal 2018 price/earnings ratio of 6.8 is low relative to the S&P/ASX index on 16, but reflects our view that earnings will continue to fall. We expect taxi fare turnover and revenue to keep declining, excluding acquisitions, and expect cost cuts to be...CabCharge Australia operates Taxi Networks and provides an alternative payment system to cash for the Taxi Industry. Co. provides Taxi Network services in Sydney, Melbourne, Adelaide, Newcastle, regional Victoria and New South Wales, and the Northern Territory. Network services include taxi booking services, taxi fit-outs and repairs, vehicle financing and insurance, and driver training and education. Co. also holds a 49.0% investment in a route, school and charter bus services company, ComfortDelGro Cabcharge Pty Ltd, and a 49.0% investment in CityFleet Networks Ltd, a provider of account, booking and dispatch services for taxis and private hire vehicles, and coach services in the U.K.
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