In this new series, we will feature one Singapore-listed company each time as a quick guide to everything you should know about it in 60 seconds.
In this instalment, we have ComfortDelGro Corporation Ltd (SGX: C52). Previously, we featured CapitaLand Mall Trust (SGX: C38U), a retail real estate investment trust (REIT) that owns 15 shopping centres in Singapore.
What’s ComfortDelGro’s Business About?
ComfortDelGro is one of the largest land transport companies in the world. The company operates in several countries, including Singapore, Australia, and the United Kingdom.
ComfortDelGro’s businesses include bus, taxi, rail, car rental and leasing, automotive engineering services, inspection and testing services, and driving centre, among others.
The bus and rail businesses in Singapore operate under a separately-listed company, SBS Transit Ltd (SGX: S61). As of 27 February 2019, ComfortDelGro owned around 74% of SBS Transit.
Meanwhile, its inspection and testing services business operates under VICOM Limited (SGX: V01), which is around 67% owned by ComfortDelGro.
ComfortDelGro’s Financial Highlights
The following shows ComfortDelGro’s financial summary from 2014 to 2018:
|Revenue (S$' million)||3,680.2||3,725.7||3,635.5||3,576.4||3,805.2|
|Net profit (S$' million)||283.5||301.9||317.1||301.5||303.3|
|Earnings per share (cents)||13.29||14.07||14.72||13.95||14.01|
|Net profit margin||7.7%||8.1%||8.7%||8.4%||8.0%|
ComfortDelGro’s revenue and net profit have not grown much over the years. Revenue grew from S$3.68 billion in 2014 to S$3.81 billion in 2018, up by just 0.8% each year. Likewise, net profit increased by 1.7% per annum, from S$283.5 million to S$303.3 million.
The slow revenue growth can be mainly attributed to the slowdown in ComfortDelGro’s taxi business. Keen competition from ride-hailing apps such as Grab has caused taxi revenue to dwindle since hitting a peak of S$941 million in 2015.
It is commendable, though, that ComfortDelGro had managed to keep its net profit margin steady throughout the period.
As of 30 September 2019, ComfortDelGro had S$518.5 million in cash balance and S$633.8 million in total debt, giving a net debt position of S$115.3 million. The company’s gearing is still manageable.
ComfortDelGro’s Dividend History
ComfortDelGro has delighted shareholders by paying a consistently increasing dividend over the years.
|Year||Dividend per share (Singapore cents)|
Total dividend per share has swelled some 6% each year, from 8.25 cents in 2014 to 10.50 cents in 2018.
Major Risk For ComfortDelGro To Take Note Of
I would say one of the biggest risks for ComfortDelGro comes from its taxi business, whose revenue has fallen since hitting a high in 2015 to S$726.5 million in 2018.
In ComfortDelGro’s third quarter of 2019, taxi revenue continued its decline, falling 9.6%. The land transport giant said that the lower revenue was due to a reduction in its operating fleet.
Its outlook statement was grim too; it mentioned that “[r]evenue from the taxi business is expected to be lower amidst keen competition”.
ComfortDelGro’s Share Price And Valuation
ComfortDelGro’s share price has been on a decline since 2015.
At the time of writing, ComfortDelGro’s share price is at S$2.32. At that price, ComfortDelGro has a price-to-earnings ratio of 17 and a dividend yield of 4.6%.
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Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. Readers should always do their own due diligence and consider their financial goals before investing in any stock. The writer may have a vested interest in the companies mentioned.