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Strong Q1 Result Drives CDG’s Share Price higher
Tradeable, Tradeable Ideas | 17 May 2014
Related stocks:
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By: Lim Si Jie
Articles (169) Profile
  1. ComfortDelGro’s strong 1Q14 performance is pushing ComfortDelGro’s share prices to new highs.
  2. The strong Q1 performance is backed by strong results over the past five years.
  3. Stochastic and ADX point to an uptrend for ComfortDelGro in the short run.

ComfortDelGro Q1 Results Released
ComfortDelGro (CDG) announced its 1Q14 results on 12th May and reported a 9.7 per cent rise in first quarter net profit from the same period last year. The group’s net profit rose to $63.3 million for the three months ending March 31st.

The increase in net profit is attributed to broad based growth in CDG’s key businesses leading to higher revenue as revenue rose by 9.2 percent to $950.8 Million in Q1 2014.
Revenue for CDG’s taxi business rose by 7 per cent to $305.8 million. Revenue in Singapore was 7.8 percent higher ($228.3 million) due to the higher rental income from a larger fleet, an increase in new replacement taxis and a higher volume of cashless transactions.

Proven Track Record
Source: FT.com, Charts on CDG's revenues (top) and net profits (bottom)
Source: FT.com, Charts on CDG’s revenues (top) and net profits (bottom)

CDG’s good results in the first quarter in 2014 is by no means a fluke. It is definitely a steady growth in terms of revenue and net income that is not catalyzed by one-off gains.
Revenue has been steadily growing since 2009. Although critics may argue that the growth is not substantial in terms of percentage, I beg to differ. It is always easy for a small company to increase by a huge percentage due to the relative size of the company.

However, it is harder for a company of CDG’s size to see a 25 percent growth in revenue when it is already raking in more than $3 billion in revenues. Expecting CDG to grow at that rate is like expecting an oil tanker to travel at the speed of a smaller speedboat; it just doesn’t work that way.

Net income also grew steadily for the same five year period. Some companies can’t even secure three years of consistent growth in revenue and net income, let alone five. The proven track record demonstrates CDG’s strong fundamentals as a company in the long run.

Even analysts have been changing their forecasts to adopt a more positive outlook on the prospects of CDG in the long run.

Source: FactSet, Chart on analysts' calls on CDG
Source: FactSet, Chart on analysts’ calls on CDG

Stochastic Turning Around

A technical analysis of CDG's chart
A technical analysis of CDG’s chart

Stochastic indicators are signalling that CDG’s share price is poised for a turnaround to embark on an uptrend. This is supported by the ADX which also signals that CDG is in a positive upward trend as D+ outweighs D- value.

#Bullish For Both Long And Short Term
Given that ComfortDelGro has just breached the $2.12 resistance level in recent trading, investors should try to catch the short term bull run before it loses steam.

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Si Jie is no stranger to investing having started his journey at a young age. He is heavily influenced by acclaimed investors such as Benjamin Graham, Peter Lynch, and John Rothchild.

Please click here for more information about this author.

ComfortDelGro Corp  2.530 +0.04 +1.61%   
Business: [FY18 Turnover] Public transport services (71.2%), taxi (19.1%), others (9.7%).

Insight: May-19, 1Q19 revenue rose 7.8% to $947.3m, underpi... Read More


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The Shares Investment editorial team welcomes constructive feedback on our coverage and content. We would also be delighted to answer any questions on the above article. Leave us a comment below, and we'll get back to you shortly!

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