The ComfortDelGro Corporation isn’t in its best shape because demand for public transportation, its core business, has remained low. Many analysts have backed this outlook, noting the lack of activity last year because of the ongoing pandemic.
However, ComfortDelGro Corporation Limited is an investment holding company that deals in land service markets, including lucrative and popular taxi and car rental and leasing preferred by many people nowadays. Is there hope that ComfortDelGro Corporation’s share prices will still recover? Technical analysis and foundational analytics in this review can shed light on the possible foreseeable future movements.
Let’s learn a bit more about ComfortDelGro Corporation before diving into its balance sheet and equity ratio.
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ComfortDelGro Corporation Limited is a Singapore Exchange listed company focused on land transportation, maintenance, and engineering services in Singapore, U.K./Ireland, Australia, China, Vietnam, and Malaysia. The company was founded on March 29, 2003, and has its headquarters in Singapore. Its core investment segments are the following:
- Public Transport
- Automotive Engineering
- Inspection and Testing
- Driving Centers
- Car Rental and Leasing
- Bus Stations
Portfolio and Assets
- The Public Transport Services segment provides bus and rail services to Singaporeans and foreign workers traveling on public transport systems. It also owns transportation and land service assets in U.K./Ireland, Australia, China, Vietnam, and Malaysia.
- The Taxi segment deals with renting out, operating, and advertising on taxi and taxi bureaus.
- The Automotive Engineering Services segment conducts vehicle repair and maintenance services. It also includes constructing specialized vehicles, bus assemblies, car crash repair services, engineering, and diesel sales.
- The Inspection and Testing Services segment conducts motor vehicle inspection services, testing, inspection, and consultations.
- ComfortDelGro’s driving centers focus on providing driving lessons and courses.
- Car rentals are the primary activities of its car rental segment.
- The Bus Station segment includes running busses and large-haul public commute systems, including commission income from fare collection.
Let’s take a look at how ComfortDelGro dividend payout performed recently.
|Year||Yield||Total||Amount||Ex Date||Pay Date|
|2021||2.22%||S $ 0.035||S $0.021||2021-08-20||2021-09-02|
|2020||3.33%||S $ 0.053||S $0.0529||2020-06-01||2020-06-09|
|2019||6.70%||S $ 0.107||S $0.045||2019-08-20||2019-08-28|
|2018||6.54%||S $ 0.104||S $0.0435||2018-08-16||2018-08-28|
|2017||6.54%||S $ 0.104||S $0.0435||2017-08-17||2017-08-28|
Based on this table, ComfortDelGro’s performance has sharply declined from a high of 6.70% down to 2.22%. The immense drop in dividends from S $0.107 to S $0.035 has been the biggest loss for the blue-chip company’s shareholders. Unfortunately, we predict it will likely drop in the next few years until the dust settles on the global pandemic.
We can clearly see the reason for ComfortDelGro’s steady dividend payout decline from its portfolio and assets. Singapore’s public transport system and automotive industry have taken a massive loss in the last two years because of the pandemic and country-wide lockdowns. Plus, uncertainty greatly looms in Singapore’s transport market because the pandemic has yet to see an end in sight.
By Geographical Segment (in S$ millions)
|Singapore||2,133.7 (58.7%)||2,107.1 (59.0%)||2,232.8 (58.8%)||2,258.9 (57.9%)||1,769.8 (54.8%)|
|U.K./Ireland||911.8 (25.1%)||855.5 (24.0%)||890.8 (23.4%)||853.8 (21.9%)||733.9 (22.7%)|
|Australia||385.5 (10.6%)||421.8 (11.8%)||503.2 (13.3%)||627.6 (16.1%)||608.1 (18.9%)|
|China||191.7 (5.3%)||178.9 (5.0%)||164.2 (4.3%)||155.7 (3.9%)||113.4 (3.5%)|
|Vietnam||7.6 (0.2%)||5.3 (0.1%)||2.9 (0.1%)||2.6 (0.1%)||1.4% (n/a)|
|Malaysia||2.9 (0.1%)||2.6 (0.1%)||2.5 (0.1%)||2.5 (0.1%)||2.0%(0.1)|
From this chart, we can see that ComfortDelGro’s financial situation had massively declined between 2019 and 2021 because of the pandemic’s transport and movement restrictions. The least-hit ComfortDelGro geographical segments are U.K., Ireland, Malaysia, and Australia, which saw a minor hit in their respective total profitability.
|Public Transport Services||2,305.8 (63.5%)||2,398.9 (67.2%)||2,710.3 (71.4%)||2,878.6 (73.8%)||2,567.9 (79.5%)|
|Taxi||918.0 (25.3%)||803.7 (22.5%)||726.5 (19.1%)||664.7 (17.0%)||403.2 (12.5%)|
|Automotive Engineering Services||204.8 (5.6%)||171.1 (4.8%)||166.1 (4.4%)||159.2 (4.1%)||89.4 (2.8%)|
|Inspection and Testing Services||103.7 (2.9%)||100.7 (2.8%)||99.7 (2.6%)||100.9 (2.6%)||84.2 (2.6%)|
|Driving Center||39.7 (1.1%)||42.0 (1.2%)||43.3 (1.2%)||48.1 (1.2%)||41.2 (1.3%)|
|Car Rental and Leasing||34.3 (0.9%)||29.2 (0.8%)||26.4 (0.7%)||27.8 (0.7%)||27.0 (0.8%)|
|Bus Station||26.9 (0.7%)||25.6 (0.7%)||24.1 (0.6%)||21.8 (0.6%)||15.7 (0.5%)|
ComfortDelGro’s taxi business takes the biggest pie among all its other business segments despite incurring a huge 13% approximate loss. The business’ taxi segment operates well because most countries allow the movement of public utility vehicles that allow only one group of passengers with limited seating. Thankfully, ComfortDelGro can continue this performance because this policy hasn’t changed for most countries.
The impending pandemic’s “investor worry” and the lack of public transportation demand has seen ComfortDelGro’s one-year net profit in 2020 decrease by a massive 77% to S $61.8 million. On the other hand, its revenue dropped by 17% to S $3.2 billion. Things may not look up for the blue-chip land service company, but some analysts believe ComfortDelGro can still grow. They point to Singapore’s domestic transport recovery that is behaving according to their expectations considering the pandemic.
Dividend and Payout Ratio
Due to its multiple segment slump, ComfortDelGro’s dividends have declined down to 2.64% for unitholders. However, financial analysts are still optimistic about ComfortDelGro’s dividend recovery because it can still make profits within the next few years as multiple economies open with the successful administration and lowering of pandemic cases worldwide.
When it comes to its debt, ComfortDelGro has minimal headroom for any. Recently, it only had a one-off S $98.8 million gain on 30 June 2021, helping its profits grow to 4.6% from 3.2% in the same period of the previous year. This indication, however, doesn’t provide any clarity or certainty that ComfortDelGro’s cash flow is stable and can take on additional financing for expansion.
As of 30 August 2021, ComfortDelGro’s share price is at S $1.64. The stock’s performance is in a fluctuating pattern with an equal number of buyers and sellers, indicating that it will neither rise nor fall in value anytime soon. On 20 September 2021, ComfortDelGro’s share prices fell to a low S $1.35 and had skyrocketed to an S $1.81 per share price on 19 April 2021.
Surely, we do not see the final dividend price of ComfortDelGro anytime soon. We believe it’s still a watchlist add for any investor. A blue-chip business is highly likely to recover from any financial failures, which means economies opening with high demand for land service will increase ComfortDelGro’s value. Many experts back this forecast with a potential to grow up to 16.3% in 1-3 years.
Australian-Focused Value Improvement
ComfortDelGro’s land services aren’t going away any time soon. According to the company, they’re focused on improving their Australian land services because of the country’s virtually zero pandemic cases and continuing need for high-quality land transport services. Additionally, ComfortDelGro plans to expand its operations in the U.K./Ireland and Vietnam too.
ComfortDelGro: Risks Involved
ComfortDelGro is a land transport service business that is in direct opposition to environmental initiatives. The company has pledged to reduce its negative environmental impact in the past, and analysts confirm that it’s on track in meeting its medium and long-term environmental goals. Despite these successes, however, some analysts believe that ComfortDelGro will find ride-hailing applications and its taxi business downsizing as major growth concerns in the future.
We also believe ComfortDelGro’s share price fall is temporary, but it’s here to stay for a medium-term period. We have to agree with the experts regarding blue-chip companies that they can recover and have enough assets to start and expand their business. Once the pandemic becomes a thing of history, we’re confident that ComfortDelGro will elevate its business to new heights.
To Sum it All Up:
- ComfortDelGro is a land service business that has seen a huge drop in share price value in the last five years.
- Many analysts believe it can easily recover because land transport will always be in high demand, just not during the pandemic.
- We highly recommend holding on to your ComfortDelGro shares or buy them at a lower price today because it’s likely to increase in value in the next few years.
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