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Chart of the Week: ComfortDelGro Stock Back in the Driving Seat?
April 16, 2021
As the Singapore government recently announced a relaxation of workplace rules, which will see more people return to offices, investors have looked towards potential winners in specific sectors.
Perhaps one of the biggest “reopening plays” has been taxi and bus fleet operator ComfortDelGro Corporation Ltd (SGX: C52).
The firm, which runs the fleet of bright yellow and dark blue “Comfort” taxis in the city state, has seen renewed interest from investors as individuals start to return to work.
Weak earnings but is the turnaround real?
Unsurprisingly, Comfort was hit hard by the Covid-19 pandemic last year as the company posted its first-ever operating loss in 2020.
There was some respite as government support measures helped them to post a full-year net profit of S$61.8 million, which was down 77% year-on-year.
Although the company has operations in Australia, China, the UK, Ireland, Vietnam, and Malaysia Singapore still made up nearly 55% of its total revenue in 2020.
Investors are still bullish, with shares of Comfort up nearly 8% so far in 2021 (see below). They’re up nearly 33% since a recent low in October, just before news of a vaccine came out.
Yet the company remains challenged in the space. Even though Uber exited the taxi market in Singapore, Grab and Gojek remain strong competitive threats.
Then there’s the rise of electric vehicles (EVs) and the potential costs of converting their fleets to EVs over the next decade.
With a stock price that’s still off its all-time high of just over S$3.21 in mid-2015, the long-term growth story for ComfortDelGro still looks unappetising for those of us who want to see sustainable capital growth.
Source: Google Finance, as of 16 April 2021
Disclaimer: ProsperUs Head of Content Tim Phillips doesn’t own shares of any companies mentioned.
Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth.
He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be.
In his spare time, Tim enjoys running after his two year-old son, playing football and practicing yoga.