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ComfortDelGro – Gunning For Both Growth & Dividends
Tradeable, Tradeable Ideas | 21 August 2014
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By: Raymond Leung
Articles (142) Profile
  1. ComfortDelGro announced revenue that crossed the billion dollar mark (+11.9 percent) that pushed profits to $75.7 million (+9.9 percent).
  2. English operations helped to push revenues higher due to the strength of the Sterling Pound.
  3. With a weak Australian Dollar, CDG is actively looking for expansion opportunities there.

Analysts' updates on ComfortDelGro

ComfortDelGro (CDG) announced its 2Q14 results with an 11.9 percent increase year on year (YoY) in revenue. Revenue for the group crossed the billion dollar mark this quarter as it increases from 2Q13’s $908.4 million to the current $1 billion.

Net profit for CDG grew 9.9 percent YoY for the quarter from $68.9 million to $75.7 million. For the current quarter, CDG experienced broad based growth with all its business segments. Positive foreign currency translation attributed strongly to the revenue with $99.5 million.

Among those translations, the Sterling Pound contributed $10.4 million. CDG’s decisions for overseas expansion can be well justified this quarter as they significantly mitigated the group’s rising cost pressure with its local operations.

CDG's UK operations are spearheaded by its bus operations (Metroline) there

Currently, CDG derives 41.2 percent of its revenue from its overseas operations while its local operations continue to be the main contributor.

CDG’s Australia and China operations are slowing down as the respective economies faces strong headwinds and a negative currency translation. However, a stronger Singapore and United Kingdom (UK) economy coupled with positive translation of the Pound made up for the differences.

With a weak Australian dollar (AUD), CDG is actively looking for expansion opportunities in the country. Earlier this month, the group acquired a bus company in Sydney with more acquisitions probably in the pipeline.

Analysts from the street expect a strong catalyst from the transformation of the local bus industry by the Land Transport Authority (LTA). CDG is expected to free up cash from the sale of its bus assets to LTA. A huge dividend may be declared after the sale goes through.

For 2Q14, CDG declared a dividend of $0.0375 but is currently trading ex-dividend. Analysts from MacQuarie Research gave the group a “Buy” call with a potential upside of 18.9 percent.

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Trained in fund management, Raymond is familiar with shares and various investment vehicles.

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ComfortDelGro Corp  2.460 -0.02 -0.81%   
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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