Comfort Delgro

Thread Rating:
  • 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5
(07-10-2017, 11:31 PM)Big Toe Wrote: What is going on here is happening across many industries. Disruptive technology. And the thing about disruptive technologies is that some do not have a proven business model. Their plan is to gain market share at all cost with the help of investors with very deep pockets.
Some have no visible path to profitability, their performance now is not measured by profitability.

This phenomenon is actually not new. New entrants will always try to lure stakeholders with carrots, may it be employees or customers.
The new entrants may not be sustainable after all but if the existing player does not have enough financial backing to fend them off, the new entrants may very well win, not due to a sound business plan but the sheer amount of money given to them to burn.

Agree 99%. The only thing that I might change is the label: from disruptive technology to presumably disruptive technology. The willingness of foolish investors, lenders or governments (and of course the current easy money environment adds fuel to the fire) to throw away good money after bad (even in the face of awful data) cannot be underestimated.....
Reply
(08-10-2017, 12:31 AM)CY09 Wrote: Hi TTTI,

I am probably haunted by my experience at Penguin Holdings. In 2014-15, I made the argument that Penguin's FCF numbers was strong and that Mr. Market was unjustified to sell the stock down.  I failed to factor one key point - FCF is dependent on i) how much revenue is generated and ii) how quick revenue converts to cash. My horror in investing in Penguin manifested in point i) where the O&G industry slowdown caused a fall in revenue and in turn penguin FCF was affected and rightly proven so, with its recent FY 16 results.

Fast forward to CDG and using this tainted lens of mine. Right now, CDG's revenue from taxi is falling due to a) declining rental rates and b) a smaller fleet. This will affect revenue and in turn Cash flow generated from Ops. In this FY we are not seeing this fall in great effect because CDG had greatly cut down on CAPEX by not replacing its old taxis at a 1-1 ratio. This has helped maintain FCF numbers.

However in the future, it is not possible for CDG to continuously sting on CAPEX by not replacing its taxis at a 1-1 ratio [unless it intends to exit from the taxi business]. It is at this juncture, where cash for CAPEX has to be spit out but CDG's cash flow generated from operations is now at a much reduced level due to smaller fleet.

To summarize, current FCF number may be strong now due to past revenue and cut in CAPEX. But can this FCF number be still replicated when revenue is falling in the future?

*Mgmt can still support dividends with a weaker FCF, they just have to borrow money to maintain dividends (see M1 and Starhub case study)


CDG is deliberately not spending on their cab business. They have to scale down in the face of a competitor that has no regard for spending or profitability.
That would of course impact on their revenue and earnings, but even then, it's 1/3 of their revenue. CFs will be insulated, and even if we cut FCF by 30%, their current dividend would be well supported.

This is probably a different scenario from Penguin, although I am not privy to what happened with Penguin.
In this scenario, their other businesses are niche, protected businesses. Particularly so with the new bus contracting model.

So, if all the other segments and subsidiaries are doing alright, the negativity arises mostly from the cab challenges. In terms of FCF, cab would have a limited impact cos like you said, Capex is cut, although it affects profitability and CFs.

I don't think CDG will increase borrowings to support dividend payout. 
I've already highlighted this scenario for M1, I don't like seeing a long term record of increasing debt with dropping holdings of cash and other equivalents
Reply
(04-10-2017, 06:14 PM)specuvestor Wrote: For that you use your heuristic judgement at that split second... that was one of the theme in the movie iRobot Smile

On the other hand, once you programmed in... who would buy a product that by default will jeopardise the buyer's (ie driver) well being? Think consumer rights... it's complicated

Side track a bit... Didn't know there's actually a video on this

https://youtu.be/ixIoDYVfKA0

If decisions in the trolley problem is so simple then we should just nuke NK to save more lives in future
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
Reply
some might say that aint a bad idea haha.

interesting video! talk about unsolvable issues...caught between a rock and a hard place and the devil and the deep blue sea...
Reply
What's preventing CD from scrapping its online booking fees to compete with Grab/Uber? I mean CD has its own booking app and the only difference it seems is that CD charges a booking fee. What did I miss? (Confession: I have never used Grab/Uber till though I have downloaded Grab app recently.)
Reply
CDG is a very proud company , they always  call for the shot .
“risk comes from not knowing what you’re doing.”
I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
Reply
Earnings over the last 3 quarters


1Q 2017: 3.83 cents
2Q 2017: 3.67 cents
3Q 2017: 3.70 cents

Bottom already?
My Dividend Investing Blog
Reply
This Taxi Company Lost 11% of Its Value While Waiting for Uber

By Livia Yap
December 7, 2017, 4:55 PM GMT+8

ComfortDelGro Corp. has lost S$500 million ($370 million) in just four months -- on track to become Singapore’s second-worst performing stock in 2017 -- as investors lose patience over a planned venture with Uber Technologies Inc.

More than three months after the operator of Singapore’s largest taxi fleet said it is in talks with Uber Technologies Inc. for a potential alliance, nothing has been announced. ComfortDelGro has lost about 11 percent of its value since announcing the negotiations in August. The stock’s market capitalization has declined by $1.2 billion so far this year, mainly on concerns about its taxi business.

Company executives have “hinted” that the discussions with Uber would likely end by the end of 2017, but no commitment has been given, Eugene Chua, an analyst at OCBC Investment Research wrote in a note on Nov. 29.

More details in https://www.bloomberg.com/news/articles/...g-for-uber
Specuvestor: Asset - Business - Structure.
Reply
The deal with Uber has been finalised. But it remains to be seen if this will arrest the slide. Frankly, I'm not really sure if this is good. I dun understand why CDG need to take a stake in Lion City Holdings (which own LCR). And why it would pay for more vehicles when utilisation increases.

And all these when your own taxi fleet is shrinking? Where the logic in that decision?

And Uber has a tainted reputation all over the world. Why CDG want to get involved with the stink is beyond me.

Sounds like a desperate and potentially expensive bet on the part of CDG. It's yet another in a long line of Spore Inc's supposedly blue chip companies to suffer from market disruptions.

COMFORTDELGRO TIES UP WITH UBER TECHNOLOGIES, INC

Media Release: COMFORTDELGRO AND UBER JOIN FORCES
Reply
yes it's puzzling why would they wanna increase fleet size? i see it more like uber getting out of sg
Reply


Forum Jump:


Users browsing this thread: 4 Guest(s)