ComfortDelGro's profit in the taxi segment to grow 8% in 2013E

That's 27% of the company's operating profit growth.

According to Barclays, it is becoming increasingly popular for taxi licence holders to rent taxis following a fare structure adjustment at the beginning of 2012.

Barclays expects this trend to increase ComfortDelGro's pricing power and result in higher rental hire from the company's taxi fleet in Singapore. "We expect operating profit for this segment to grow 8% y/y in 2013E or by S$7mn, contributing 27% of the company's operating profit growth."

Here's more from Barclays:

Good potential from Australia bus services: The market size for private bus operators in New South Wales (NSW) could potentially triple, as the Transport Ministry starts to open up 75% of the bus operation (by serviced route-km) that is currently operated by the government to private operators in 2013.

We have not assumed any major contract wins for ComfortDelGro, and still forecast this segment's operating profit to grow 15% in 2013E or by S$14mn, driven by 5% revenue growth due to underlying traffic growth and margin expansion from economies of scale.

We estimate this segment should contribute 53% of the company's operating profit growth.

Valuation and risks: The stock is trading at 15x 2013E P/E, above the global peer average of 12x. Our forecast 2013 dividend yield of 3.5% is also below the global peer average of 4.2%. We believe the main upside risks are stronger-than-expected growth in the Australia bus operation and Singapore taxi business, as well as lower-than-expected operating costs such as labour and fuel.