Wednesday, 8 February 2017

Recent Action - Comfort Delgro

Bought 2,000 shares of Comfort Delgro (CDG) at $2.38 as my first tranche yesterday morning after putting it in queue on the previous night.

The counter has fallen below my target price for buy in recently and my first thought was maybe I should enter after their latest financial results are released on this Friday.

However I decided to do some study on their 3Q16 results.

In summary the 3Q results are not bad but not sterling either. In other words, the business remained quite stable.

Likes:

Stable operating profit.

Net cash position.

Gearing remains low.

Capex was lower compared to 3Q15. This shows the company is putting effort for sustainable growth.

Diversified businesses including non-vehicular business such as 3rd party testing house, Setsco.

Concerns:

Decreased revenue from bus BU due to the new Bus Contracting Model.

Taxi BU will continue to face headwinds from Uber and Grab. But I trust CDG will take reactive measures to tackle this. Furthermore Uber and Grad drivers are required to get a vocational license by this year.

Also expected decrease in revenue from other BUs such as the bus station, automotive engineering services, inspection & testing services and car rental & leasing should be able to be offset by the increase in revenue from the rail business especially as riderships on NEL and DTL continue to grow!

Going to ride on NEL and DTL more frequent!

CDG share price as of point of writing is $2.43.

I probably got lucky as news came out yesterday on the mandatory requirement for private-hire car drivers from operators such as Uber and Grab to get vocational license.

Hopefully the latest results on this Friday would be favourably viewed by the market as well.

Good luck and cheers to all who are vested.

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