Comfort Delgro

[BRT]

http://www.channelnewsasia.com/news/busi...up-9274568

Grab is taking another stab at the lucrative Airport taxi route.

It bypasses the $3 - $10 (if the pax is going to MBS or RWS) area surcharge which many taxi drivers enjoy when picking up tourists from Changi Airport. In fact, if I were Grab i would price that out of the $10 passengers should save, I would take a 50% cut (give them a $5 discount over taxi fares only)

And with Grab being a familiar app to other South East Asians, I wonder if local taxi companies are going to band together. We may see a downward revision of Singapore's taxi fare structure in terms of surcharge of picking up at some areas; as this will mean a decrease in revenue for cabbies, I expect further rental cuts by taxi companies.

Singapore Taxi Fare structure: https://www.lta.gov.sg/content/ltaweb/en...thods.html

i think grab is freaking clever, and doing an awesome job. a lot of strategic tie-ups, at the same time building up their e-payments capability and network. nowadays when i return from overseas, instead of joining the taxi q, i head to the pickup point to grab.

[BRT]

^^ actually the biggest problem is who is responsible for casualty: driver, passenger or pedestrian. Does the AI optimises the survivability of the driver. passenger or pedestrian eg driving into a ravine  vs swerving into a group of children.

yes, the "people problems" always take very very long. the issue that you mentioned is conventionally known as the trolley problem. a train (trolley) heads down a fork and is on track to crash into 5 kids, but on the slip track there's a fat guy...should you change the direction of the train and kill the fat guy cos somehow he's worth less (or minimizing death count)?

anyway, point being that somebody/some company needs to develop the code that makes this choice. how does one do something like that? will the regulators accept whatever the answer may be?

[TTTI]

^^ actually the biggest problem is who is responsible for casualty: driver, passenger or pedestrian. Does the AI optimises the survivability of the driver. passenger or pedestrian eg driving into a ravine  vs swerving into a group of children.

yes, the "people problems" always take very very long. the issue that you mentioned is conventionally known as the trolley problem. a train (trolley) heads down a fork and is on track to crash into 5 kids, but on the slip track there's a fat guy...should you change the direction of the train and kill the fat guy cos somehow he's worth less (or minimizing death count)?

anyway, point being that somebody/some company needs to develop the code that makes this choice. how does one do something like that? will the regulators accept whatever the answer may be?

errr this sorta decision....
don't say AI...
even humans will find it hard to decide.
There's not right or wrong here.....
There's only wrong. Both options.

[specuvestor]

For that you use your heuristic judgement at that split second... that was one of the theme in the movie iRobot

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

[CY09]

While running today, I noticed Grab has put up adverts at Bus Stops (ironically Bus Stop advertising is a business arm of Comfortdelgro)

Grab is offering Comfort Cabbies $25/day private vehicle hire for a 6 month period should they make the switch. At the current rate where Comfort taxi's rental are from $80- $109 (brand new cabs); I dont think even with the good "caring" perks CDG gives to its cabbies, a big $10,000 carrot is probably hard to resist (its more than 2 months of my pay!)

In a separate news, LTA has shown how comfort fleet has fallen to its lowest levels in 8 years. From the start of this year till now, the fleet size has shrank by 10% and compounding with a fall in daily rentals, it seems revenue is poised to fall significantly. It will be interesting from FY18 onward, we wil be seeing the full effect of revenue/profit decline on a full year basis.

While we do recall, CDG mgmt coming out previously to say their idle rate is "close to zero"; i believe that CDG mgmt was doing a "Yuuzoo" by spinning a positive vibe. To a layman, "Close to zero" sounds alright; but to investors or statisticians, we want the raw numbers or ideally, a range (i.e. 6%-7%)

For those holding to CDG as a dividend stock (i.e retiree), it is highly likely there will be a cut in dividends. Similar to SPH and Singpost, a change in the industry landscape is impacting cashflow and dividends. On a broader scale, this is challenging my notion of what is a "dividend stock" and those ideal for retirees. This is because it seems business in "stable" industries are now becoming "unstable".

<not vested nor shorted in any stocks mentioned>

[Big Toe]

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.

[starcraft_76]

Spoke to one of my relative who are Comfort driver.

Apparently, he is still prefer comfort compared to being a Grab or Uber driver.

It seems that being a Grab driver, there are some target to meet and it is thus much more stressful.

<Not Vested>

[crabcrab]

Comfort Delgro ($2.00) - Not forgetting that besides Taxi, this company still owns a sizeable fleet of buses and trains, plus the properties at bus interchange and MRT stations. At current price level valuation is considered attractive. All negative factors should have already priced in.

[TTTI]

While running today, I noticed Grab has put up adverts at Bus Stops (ironically Bus Stop advertising is a business arm of Comfortdelgro)

Grab is offering Comfort Cabbies $25/day private vehicle hire for a 6 month period should they make the switch. At the current rate where Comfort taxi's rental are from $80- $109 (brand new cabs); I dont think even with the good "caring" perks CDG gives to its cabbies, a big $10,000 carrot is probably hard to resist (its more than 2 months of my pay!)

In a separate news, LTA has shown how comfort fleet has fallen to its lowest levels in 8 years. From the start of this year till now, the fleet size has shrank by 10% and compounding with a fall in daily rentals, it seems revenue is poised to fall significantly. It will be interesting from FY18 onward, we wil be seeing the full effect of revenue/profit decline on a full year basis.

While we do recall, CDG mgmt coming out previously to say their idle rate is "close to zero"; i believe that CDG mgmt was doing a "Yuuzoo" by spinning a positive vibe. To a layman, "Close to zero" sounds alright; but to investors or statisticians, we want the raw numbers or ideally, a range (i.e. 6%-7%)

For those holding to CDG as a dividend stock (i.e retiree), it is highly likely there will be a cut in dividends. Similar to SPH and Singpost, a change in the industry landscape is impacting cashflow and dividends. On a broader scale, this is challenging my notion of what is a "dividend stock" and those ideal for retirees. This is because it seems business in "stable" industries are now becoming "unstable".

<not vested nor shorted in any stocks mentioned>

"For those holding to CDG as a dividend stock (i.e retiree), it is highly likely there will be a cut in dividends."

Interesting that you'd say so.
On the contrary, I think there won't be a cut in dividends.
Their FCF numbers currently can readily support their dividends.
On top of that, they just increased their interim dividends, won't cutting it right after increasing be a tight slap in management's own faces?

[CY09]

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)