Comfort Delgro’s PE differential with the MSCI Singapore Index has fallen to an extreme

Shares of Comfort Delgro (Buy, TP: $1.55) have been flat since February as investors preferred recovery to defensive plays but we think its time to consider accumulating the stock because the stock’s PE differential with the MSCI Singapore Index has fallen to an extreme (refer to chart 1). Based on historical behavior, the stock should start to narrow down this PE differential. At the very least, the stock should start to participate in the market’s rising trend. At the same time, if the market corrects, there will also be a flow back to defensives – a win-win situation.

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