ComfortDelGro
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-0.01
ComfortDelGro fundamentally strong but price weak
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1861-1880 of 2019
kinda funny ppl talk abt CDG, and ignoring Singapore market? Did you even read and understand what you are buying into? Also, did you understand who is backing uber and grab and many more car sharing apps (by the way, there are more than 2 car sharing companies out there)... The big guys, are big and have infinite money to burn. They are buying into the future, and with CD, ppl are buying because of their past and what they have done.
And with taxi companies, you will know that the management have been in this business for many years, and have make tons of money. Oh by the way, it used to be a monopoly business. Not many competitors and nv have to deal with new entrants. So, i will think this is a big deal for them and maybe too big a threat for them to get over. Of course, they are already very rich, and can use this opportunity to retire already. So, you have to think, if they want to allocate more money to win back the market share a not as an investor...
investshare ( Date: 05-Jan-2017 10:28) Posted:
Singapore contributes 60%.
brchkho1 ( Date: 04-Jan-2017 17:17) Posted:
As an investor, I am not too overly concern with Uber & Grab as both are still in cash burning stage, not sure how long those privateinvestors are prepared to continuing pumping cash. For CDG, it' s business is no longer relying on SG market. Am confidence of it' s mangement to run CDG.
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Singapore contributes 60%.
brchkho1 ( Date: 04-Jan-2017 17:17) Posted:
As an investor, I am not too overly concern with Uber & Grab as both are still in cash burning stage, not sure how long those privateinvestors are prepared to continuing pumping cash. For CDG, it' s business is no longer relying on SG market. Am confidence of it' s mangement to run CDG.
alexchew ( Date: 04-Jan-2017 11:39) Posted:
thanks for pointing out. You seemed to be of the opinion that uber only affects singapore then? Kinda optimistic in your thoughts.
The problem of CD or all taxi company in the world is,they have no answer for private car hires now. The penetration rate of uber is only at a relatively small % now, kinda terrifying if they manage to double it in a few years time.
Many old CD drivers are actually holding on to its shares and i hope CD will not be dropping down sharply of course. Else, their retirement plan, will be spoiled.
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From CDG own forecast, only rail biz to improve, the rest either maintain or decrease.
http://www.comfortdelgro.com.sg/uploads/FS/CDG_3Q16%20Slides.pdf
As an investor, I am not too overly concern with Uber & Grab as both are still in cash burning stage, not sure how long those privateinvestors are prepared to continuing pumping cash. For CDG, it' s business is no longer relying on SG market. Am confidence of it' s mangement to run CDG.
alexchew ( Date: 04-Jan-2017 11:39) Posted:
thanks for pointing out. You seemed to be of the opinion that uber only affects singapore then? Kinda optimistic in your thoughts.
The problem of CD or all taxi company in the world is,they have no answer for private car hires now. The penetration rate of uber is only at a relatively small % now, kinda terrifying if they manage to double it in a few years time.
Many old CD drivers are actually holding on to its shares and i hope CD will not be dropping down sharply of course. Else, their retirement plan, will be spoiled.
KAMAL0883 ( Date: 03-Jan-2017 18:39) Posted:
if CD only depend on SG market then close shop long ago liao
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thanks for pointing out. You seemed to be of the opinion that uber only affects singapore then? Kinda optimistic in your thoughts.
The problem of CD or all taxi company in the world is,they have no answer for private car hires now. The penetration rate of uber is only at a relatively small % now, kinda terrifying if they manage to double it in a few years time.
Many old CD drivers are actually holding on to its shares and i hope CD will not be dropping down sharply of course. Else, their retirement plan, will be spoiled.
KAMAL0883 ( Date: 03-Jan-2017 18:39) Posted:
if CD only depend on SG market then close shop long ago liao
alexchew ( Date: 03-Jan-2017 18:04) Posted:
i think, younger population will use grab to get private cars instead of taxi (unless surge demand). Older generation, will still stick to taxi for time being. It' s only a matter of time they will switch. So, taxi will get a smaller share of riders (in absolute number), year on year. Esp, now with tourism coming down, it is even hitting them harder.
Also, most taxi drivers are older in age, and by natural attriution when they retire, this will affect the number of taxi leased. Unless the rental rates comes down, it will be hard for CDG to retain old drivers and ATTRACT new drivers eventually.
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how' s their revenue breakdown by country?
Observers ( Date: 04-Jan-2017 06:40) Posted:
What I like about CDG is that they have always been exceptionally transparent about their financial accounts, esp for their annual reports. It' s not hard to make a guesstimate on the proportion of profits/revenue coming from all of their various divisions within the group. DYODD.
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What I like about CDG is that they have always been exceptionally transparent about their financial accounts, esp for their annual reports. It' s not hard to make a guesstimate on the proportion of profits/revenue coming from all of their various divisions within the group. DYODD.
lol RHB only focus on the good news (oversea acquisition news). The bank didn' t even bother to update their TP to reflect the bad news: OPEC deal and increase intensity in competition as reflected by TransCab decision to slash rental price. Such baisness...
By the way, why use FCFF valuation model when CDG has constant dividend payout? By using FCFF RHB has to vaguely estimate the cost of debt for CDG debts which are not even traded in the market- one more vague element in a valuation model = less accrurate TP...
KAMAL0883 ( Date: 03-Jan-2017 17:54) Posted:
Overseas acquisition driving growth
ComfortDelGro ■ has announced the acquisition of the remaining 49% stake in its
Australian bus business, CDC.
■ The acquisition price of A$186m (S$196m), based on 4.6x 2015 EBITDA, is
palatable and should not be a stretch to the group&rsquo s balance sheet, in our view.
■ We raise our FY17-18F EPS by 3.9-5% to reflect the positive impact on the group&rsquo s
net profit from the additional stake in CDC.
■ We maintain our Add call on ComfortDelGro, with a slightly higher target price of
S$2.91, based on CY17F DCF (WACC: 7.0%).
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if CD only depend on SG market then close shop long ago liao
alexchew ( Date: 03-Jan-2017 18:04) Posted:
i think, younger population will use grab to get private cars instead of taxi (unless surge demand). Older generation, will still stick to taxi for time being. It' s only a matter of time they will switch. So, taxi will get a smaller share of riders (in absolute number), year on year. Esp, now with tourism coming down, it is even hitting them harder.
Also, most taxi drivers are older in age, and by natural attriution when they retire, this will affect the number of taxi leased. Unless the rental rates comes down, it will be hard for CDG to retain old drivers and ATTRACT new drivers eventually.
investshare ( Date: 29-Dec-2016 14:26) Posted:
| Yes but majority still prefer taxi. But they use Grab to call taxi. So the major threat now to CDG is not taxi vs private car but CDG vs other taxi co. If you are a new taxi driver, why would you prefer CDG |
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i think, younger population will use grab to get private cars instead of taxi (unless surge demand). Older generation, will still stick to taxi for time being. It' s only a matter of time they will switch. So, taxi will get a smaller share of riders (in absolute number), year on year. Esp, now with tourism coming down, it is even hitting them harder.
Also, most taxi drivers are older in age, and by natural attriution when they retire, this will affect the number of taxi leased. Unless the rental rates comes down, it will be hard for CDG to retain old drivers and ATTRACT new drivers eventually.
investshare ( Date: 29-Dec-2016 14:26) Posted:
Yes but majority still prefer taxi. But they use Grab to call taxi. So the major threat now to CDG is not taxi vs private car but CDG vs other taxi co. If you are a new taxi driver, why would you prefer CDG?
kimenglee ( Date: 29-Dec-2016 13:45) Posted:
Passengers also switching to grab and uber due to the low fare. Isn' t it?
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Overseas acquisition driving growth
ComfortDelGro ■ has announced the acquisition of the remaining 49% stake in its
Australian bus business, CDC.
■ The acquisition price of A$186m (S$196m), based on 4.6x 2015 EBITDA, is
palatable and should not be a stretch to the group&rsquo s balance sheet, in our view.
■ We raise our FY17-18F EPS by 3.9-5% to reflect the positive impact on the group&rsquo s
net profit from the additional stake in CDC.
■ We maintain our Add call on ComfortDelGro, with a slightly higher target price of
S$2.91, based on CY17F DCF (WACC: 7.0%).
It might not be taxi coy milking riders for a long time...
Just that uber and grab (private-hire cars) are too aggressive in their money-throwing habits...as long as they keep throwing money away to benefit drivers and passengers...taxi companies will suffer...especially the smaller ones (maybe wind up)...and yes (psychological aspect too) - who wants to drive a taxi when they can drive a private car and be a chauffeur instead of a taxi driver...
I believe if regulation cannot set in fast and sufficient enough...the taxi model got to be revamped...if not every year market share of taxis and margin will decrease... as for comfortdelgro (it should survive this much better as it is diversified)..DYODD
mepkoh ( Date: 29-Dec-2016 17:24) Posted:
taxi coy ..have been milking riders for a long time....
the recent rental discount means ..they have been raking big profits for the past 2 decades..now is payback time..
Qanghoo ( Date: 29-Dec-2016 17:17) Posted:
If the local taxi operators are able to weather the new competition n survive, even with such seemingly unbelieveable low rentals, it proves that the previous environment that had entrenched the monopolistic situation for so long had just made sporean commuters such stupid suckers. N why did we allow ourselves to be sucked in for so long?
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taxi coy ..have been milking riders for a long time....
the recent rental discount means ..they have been raking big profits for the past 2 decades..now is payback time..
Qanghoo ( Date: 29-Dec-2016 17:17) Posted:
If the local taxi operators are able to weather the new competition n survive, even with such seemingly unbelieveable low rentals, it proves that the previous environment that had entrenched the monopolistic situation for so long had just made sporean commuters such stupid suckers. N why did we allow ourselves to be sucked in for so long?
kimenglee ( Date: 29-Dec-2016 13:45) Posted:
Passengers also switching to grab and uber due to the low fare. Isn' t it?
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If the local taxi operators are able to weather the new competition n survive, even with such seemingly unbelieveable low rentals, it proves that the previous environment that had entrenched the monopolistic situation for so long had just made sporean commuters such stupid suckers. N why did we allow ourselves to be sucked in for so long?
kimenglee ( Date: 29-Dec-2016 13:45) Posted:
Passengers also switching to grab and uber due to the low fare. Isn' t it?
investshare ( Date: 29-Dec-2016 11:21) Posted:
| I have said many times here. The major real threat from Grab is not passengers switching away, BUT drivers switching away. In the past CDG is the biggest company, so when ppl book they first call cdg. This sort of give drivers better business. But now what is cdg competitive edge against other taxi company |
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Saying hi to Mr Liu from Platin Sec.
You can decide if I make a good research analyst after I beat the forecasts of the professional analysts.
The_Crow ( Date: 27-Dec-2016 18:22) Posted:
Rosesyrup Research
CDG, a drying cash cow
Reccomendation: Short Sell Target price: $1.62
Downside: 59%
ComfortDelGro Group (CDG)
The land transport company is involved in an array of businesses ranging from maintance of vehicles to taxi rental, with operation in different parts of the world. To make analysing this well diversified company more bearable, in this report we will only look at CDG' s operations which have significant impact on the group financial figures. As of the end of 2015, around 80% of the firm profit came from its taxi and bus operation. Its operations in Singapore and UK derived 75% of the group profit, while operation in Austrialia only accounted for 14% of its profit.
New and stronger competitors on the horizon
For decades, the two Singapore bus operators had enjoyed a long period of stability and little competition. However all these are starting to change under the new Bus Contracting Model intiated by the government to improve local transportation efficiency. Under the new model, all buses routes are divided into 12 packages with only 3 of them opened to foregin competitors' bids- CDG lost all 3 packages to foregin operators. As the governement continues to push for efficinecy and open up more packages for foregin bids, we expect the inefficient and uncompetitive CDG to lose out even more.
On the taxi scene, we see the entrance of new players, such as Uber and Grab. With their new business model they are able to offer arguably better services than CDG, without owning a single fleet. The fast rising of these new players throughout the world is another testimony of how deadly a threat the new business model is to the traditional operators like CDG. In fact the company revenue growth rate slowed from its long term average of 4.5% to only 1.5% in 2015.
Despite the obvious danger, we noticed that alot brokerage houses (RHB, UOB, OCBC, DBS, CIMB etc) continued to make buy call on CDG in late 2016 and the common reason they gave was the financial figures released by CDG was little affected after the entrance of Uber. While it is good to consider other analyst opinions, we would like to introduce a new concept for readers to ponder about when making their investment decision. When it comes to analysing new technology such as Uber or even Iphone, one important factor to consider is the penetration rate- percentage of the market which has adopted the new technology. Uber has a 20% penetration rate in US where one the largest cab operator in San Francisco has filed for bankruptcy. As of 2016, penetration rate in Singapore stands at only 4%. Do note that we are not saying CDG might face the desinity as its counter part in San Francisco. We are simply pointing out that it is too early to say Cab hiring apps post negligible threat to CDG, as the the financial figures released by CDG has yet to reflect the full brunt of the disruptive technology.
Rising Oil Price
The oil price slump started off in 2014 was mainly caused by the price war among OPEC members fighting for market shares. Energy reliant transportation companies like CGD are among the greatest beneficiaries from the depressed oil price. As a result CGD share price spiked sharply from $2 at the beginning of 2014 to a peak of $3.21 in June 2015, representing 60% gain.
However all these cost saving are about to end with agreement signed by OPEC in Dec 2016 to cut supply glut and end the price war. While many brokerages reports stated the rise in oil price as a potential risk to investing in CDG, we believe the $3 target prices have yet to take into account of this risk factor which has become reality in Dec 2016.
Full acquisition of ComfortDelgro CabCharge (CDC)
In Dec 2016, CDG announced the acquisition of 49% stake it did not already owned in a joint venture with Cabcharge Austrialia. We see this as a welcoming strategy to further diversify the group source of income to minimize the impact of economy downturn in UK and Singapore on the company performance.
However as the acquisition represents significant cash outlay by CGD, this together with more uncomfortable ride ahead, lead us to believe that the company will stick to the lower end of their pledged (min 50%) dividend payout policy in the coming years.
Valuation
In this sector, we attempt to value CDG share price based on the following assumptions:
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DDM model: CDG has been issuing pretty stable dividend
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50% payout rate
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New technology penetration rate to hit 20% by 2019: Though we honestly doubt it would need that long as Singapore is a much smaller market compared to US.
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Oil price stay at $90- this was the average before 2014 slump.
Under these assumptions, the target we got is $1.62. This represents a 59% downside potential.
Reccomendation
Lower revenue from more intensed competition as well as higher cost structure is bound to hit CDG bottom line and the amount of revenue it can afford to pay out in the coming years. Although CDG recent move to further expand its business in Australia would definitely has an effect of diversifying its income and stablizing its dividend, we do not see it as sufficient. Afterall its operation in Australia accounts for less than 10% of the group revenue. We also do not see it as a strategy to counter the threat posted by disruptive technology.
CDG used to be a cash cow investment handing out stable and growing dividends to shareholders. However with the changes in macro environment, it is about to face unprecendant challenges which it is illy prepared for. While the market and various brokerage houses remain excessively optimisitc about the company prospect and keep calling for ridiculously high target prices which have not been seen for months, we reccomend investors to take advantage of the irrational optimistism in the market and short the shares to its fair value.
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Yes but majority still prefer taxi. But they use Grab to call taxi. So the major threat now to CDG is not taxi vs private car but CDG vs other taxi co. If you are a new taxi driver, why would you prefer CDG?
kimenglee ( Date: 29-Dec-2016 13:45) Posted:
Passengers also switching to grab and uber due to the low fare. Isn' t it?
investshare ( Date: 29-Dec-2016 11:21) Posted:
| I have said many times here. The major real threat from Grab is not passengers switching away, BUT drivers switching away. In the past CDG is the biggest company, so when ppl book they first call cdg. This sort of give drivers better business. But now what is cdg competitive edge against other taxi company |
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Passengers also switching to grab and uber due to the low fare. Isn' t it?
investshare ( Date: 29-Dec-2016 11:21) Posted:
I have said many times here. The major real threat from Grab is not passengers switching away, BUT drivers switching away. In the past CDG is the biggest company, so when ppl book they first call cdg. This sort of give drivers better business. But now what is cdg competitive edge against other taxi company?
kimenglee ( Date: 29-Dec-2016 11:08) Posted:
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Is this good or bad news to CDG? )
evergreen3 ( Date: 29-Dec-2016 12:34) Posted:
Transcab - has 4,500 taxi vehicles and about 11% are sitting in their garage idle with no drivers.
Premier Taxis - refused to tell how many of their taxi vehicles are unhired, but an earlier state media report estimated the amount to be about 15%. As of October, a total of 2,000 taxi vehicles are unhired and idling in the yards.
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Transcab - has 4,500 taxi vehicles and about 11% are sitting in their garage idle with no drivers.
Premier Taxis - refused to tell how many of their taxi vehicles are unhired, but an earlier state media report estimated the amount to be about 15%. As of October, a total of 2,000 taxi vehicles are unhired and idling in the yards.
No, In contrary, Grab is helping them to level the playing ground against CDG.
evergreen3 ( Date: 29-Dec-2016 12:23) Posted:
This is bad bad news.
Smaller cab companies are threat of winding up business...
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