What Does ComfortDelgro Corporation Limited’s Cash Flow Tell Us About Its Dividend
- Original Post from The Motley Fool Sg

ComfortDelgro Corporation Limited (SGX: C52) is a transport company with operations mainly in Singapore, Australia, the United Kingdom, and China. It’s the largest taxi operator in Singapore and also the majority owner of vehicle and non-vehicle testing and inspection outfit Vicom Limited (SGX: V01) and bus and rail services operator SBS Transit Ltd (SGX: S61).
As a quick recap, what we are trying to do here is to address the following question:
Is Comfortdelgro’s current dividend sustainable in the foreseeable future?
To address the above question, we will use three simple tests 1) the company’s track record in making profit 2) free cash flow and dividend analysis 3) balance sheet strength to give us an overview.
In this article, we will look at the analysis of the free cash flow and dividend payments in the last 5 years.
Readers can click here and here for the other 2 parts of the analysis.
Free cash flow:
For ComfortDelGro to pay dividends, it must be able to generate cash, pay its bills, invest in capital expenditure and pay out dividends from the left over cash. In financial term, the leftover cash after paying the bills and capital expenditure is known as free cash flow.
The idea here is pretty straight forward – a company cannot sustainably pay out more dividend than its free cash flow in the long term.
So what we want to find out here is whether the company has kept its dividend payments in the past 5 years within its means.
So let’s look at a graph to illustrate the free cash flow and dividend paid in the last 5 years:

And for those who are interested in how the numbers are derived, please see below:
Free cash flow analysis:
S$ million
2012-12
2013-12
2014-12
2015-12
2016-12
Operating cash flow
657
670
713
717
808
Interest and dividend received
17
16
16
17
17
Interest paid/payment to non-controlling shareholders
-33
-28
-33
-32
-31
Capital expenditure (net disposal)
-484
-415
-471
-388
-388
Other acquisitions/divestments
25
-141
-29
-2
-1
Free cash flow
182
102
196
313
405
Dividend paid to shareholders
130
138
165
183
199
 Source: Comfortdelgro 2012 to 2016 Annual Reports
Note – free cash flow calculation may not be exactly the same as other sources due to difference in adjustments used.
From the above, we can see that ComfortDelGro free cash flow to dividend payment has remained reasonable throughout the years. Only once in the last 5 years did the company pay more dividend that its free cash flow.
During the period, total free cash flow was about $1.2 billion whilst total dividend paid was about $0.8 billion.
Conclusion:
ComfortDelGro has mostly kept dividend payments within its means in the last five years.
In the absence of any significant decline in free cash flow, the company should be able to sustain the current dividend payout ratio.
We will now proceed to our final test here.
$ComfortDelGro(C52.SI) $SBS Transit(S61.SI) $VICOM(V01.SI)

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The Week Ahead: ComfortDelGro, ThaiBev And ST Engineering
- Original Post from The Motley Fool Sg


The Singapore earnings season will draw to a close for the blue chips this week after six more Straits Times Index (SGX: ^STI) companies step forward with results.


Thai Beverage (SGX: Y92) posted a 12% drop in bottom-line profit in May. That was due to a poor performance in its spirts and food businesses in the second quarter. The focus in the third quarter could be the performance of its recently acquired Saigon Beer Alcohol Beverage Company (Sabeco).


Defence contractor, ST Engineering (SGX: S63) kicked off its financial year in May with an 11% jump in first-quarter net profit to S$131 million. Revenue was up 5% thanks to a strong performance in aerospace and land systems.


ComfortDelGro (SGX: C52) registered a 7.8% rise in revenue for the first three months of the year, which helped to drive a 6% rise in earnings. The transportation company said last year’s acquisitions have started to bear fruit.


There are also results form a couple of farmers, namely Wilmar International (SGX: F34) and Golden Agri-Resources (SGX: E5H) and industrial conglomerate Sembcorp Industries (SGC: U96).


On the economic front, the US is expected to say that the rate of inflation for July is broadly unchanged. The core inflation rate should be around 2.1%, while the headline inflation rate might have edged up from 1.6% to 1.7%.


China could say that retail sales moderated from 9.8% in June to 8.2% in July. In June, sales were boosted by automobiles, garments and cosmetics.


Singapore’s balance of trade is expected to be stable at around S$2.5 billion in July. Meanwhile, Malaysia is expected to say that retail sales crept up from 7.8% in May to 8.1% in June.


Malaysia might also say that its economy grew 4.1% in the second quarter, which would be slightly lower than the 4.5% in the first three months of the year, while Thailand could say that its economy grew at an annualised rate of 2.5% in the second three months of the year.


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The Week Ahead: ComfortDelGro, ThaiBev And ST Engineering
- Original Post from The Motley Fool Sg


The Singapore earnings season will draw to a close for the blue chips this week after six more Straits Times Index (SGX: ^STI) companies step forward with results.


Thai Beverage (SGX: Y92) posted a 12% drop in bottom-line profit in May. That was due to a poor performance in its spirts and food businesses in the second quarter. The focus in the third quarter could be the performance of its recently acquired Saigon Beer Alcohol Beverage Company (Sabeco).


Defence contractor, ST Engineering (SGX: S63) kicked off its financial year in May with an 11% jump in first-quarter net profit to S$131 million. Revenue was up 5% thanks to a strong performance in aerospace and land systems.


ComfortDelGro (SGX: C52) registered a 7.8% rise in revenue for the first three months of the year, which helped to drive a 6% rise in earnings. The transportation company said last year’s acquisitions have started to bear fruit.


There are also results form a couple of farmers, namely Wilmar International (SGX: F34) and Golden Agri-Resources (SGX: E5H) and industrial conglomerate Sembcorp Industries (SGC: U96).


On the economic front, the US is expected to say that the rate of inflation for July is broadly unchanged. The core inflation rate should be around 2.1%, while the headline inflation rate might have edged up from 1.6% to 1.7%.


China could say that retail sales moderated from 9.8% in June to 8.2% in July. In June, sales were boosted by automobiles, garments and cosmetics.


Singapore’s balance of trade is expected to be stable at around S$2.5 billion in July. Meanwhile, Malaysia is expected to say that retail sales crept up from 7.8% in May to 8.1% in June.


Malaysia might also say that its economy grew 4.1% in the second quarter, which would be slightly lower than the 4.5% in the first three months of the year, while Thailand could say that its economy grew at an annualised rate of 2.5% in the second three months of the year.


The Motley Fool’s purpose is to help the world invest, better. Click here nowfor your FREE subscription to Take Stock — Singapore, The Motley Fool’s free investing newsletter. Written by David Kuo, Take Stock — Singapore tells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead.


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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo own shares in Thai Bev.


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Are Ride-Hailing Companies Still a Threat to ComfortDelGro?
- Original Post from The Motley Fool Sg

ComfortDelGro Corporation Ltd (SGX: C52), or Comfort for short, is a land transportation behemoth with business interests in bus, rail, and taxis. Aside from Singapore, the group has a presence in six other countries – China, the UK, Australia, Malaysia, Ireland and Vietnam.


Investors can recall the troubles associated with Comfort’s taxi fleet when Uber Technologies Inc (NYSE: UBER) started to operate and expand its fleet aggressively in Singapore back in 2013. In that same year, Grab Singapore (a home-grown ride hailing company) also started its operations and expanded aggressively with the assistance from venture capitalists.


The price wars got so bad from 2013 through to 2018 that Comfort’s taxi fleet shrank to its lowest level in a decade, to just 13,244 (down 22% from its December 2015 fleet size). In March 2018, Uber was sent packing from Singapore when Grab acquired its Southeast Asian operations, just months after Comfort had signed a strategic collaboration deal with Uber.


So the key issue is one many Singaporean companies will have to grapple with – potential disruption. More specifically for Comfort though, are ride-hailing companies such as Grab and Gojek (a new Indonesian ride-hailing company which entered Singapore in late-2018) still a major threat to it?


Comfort adding 200 taxis to its fleet


Comfort announced recently that it was adding 200 new taxis to its fleet, in what was the first addition to the fleet in 18 months. According to the group, this was due to more people switching from driving private hire cars to driving taxis instead, as driving taxis was more “stable”. The last time Comfort placed an order for taxis was in December 2016.


Dynamic fare implementation


Barely two weeks ago, Comfort declared its intention to implement dynamic pricing, along with a plan to open up its booking app to Grab and Gojek drivers. Though reasons remain unclear at this point, this move may be an attempt to stem the exodus of taxi drivers into the private hire market. The problem is that this move may backfire as it will start to blur the lines between taxis and private hire cars, with commuters lumping them together as one and the same.


Grab and Gojek attempt to become “super-apps”


Grab and Gojek are also not sitting still, with both companies adding to their respective fleets too. However, these companies also have a larger purpose in mind, which is to become a “super-app” for users to access all kinds of services, similar to the concept of an “app within an app” developed by Chinese companies such as Tencent Holdings Ltd (HKSE: 700). This goal makes them spread their resources out to different functions rather than simply ride-hailing alone and could provide some respite to Comfort.


Stabilising ride


The above evidence points to a stabilising situation for Comfort, as they are beginning to order new taxis again, possibly signalling increased demand for taxis in the near future. However, the planned implementation of dynamic pricing could work against Comfort if it cannot differentiate itself from the ride-hailing companies. This is something investors need to watch closely for developments.


In addition, Grab and Gojek are no pushovers either as both companies, though unprofitable, have massive funding backing them. So even if it looks as though the battle may be over for now, another war could be about to commence.


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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Royston Yang does not own shares in any of the companies mentioned. The Motley Fool Singapore has recommended shares of Tencent Holdings Ltd.


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ComfortDelGro’s Latest Earnings: Strong Start to the Year
- Original Post from The Motley Fool Sg

ComfortDelGro Corporation Ltd (SGX: C52) is a Singapore-based land transportation conglomerate with business interests in the bus, taxi and rail services. Apart from Singapore, it has a presence in six other countries, namely, China, the UK, Australia, Malaysia, Ireland, and Vietnam.


ComfortDelGro announced its financial results for the first quarter ending 31 March 2019, yesterday. Let’s have a quick look to see how it did.


Financial highlights


Here are some of the key financial highlights from the latest full-year results:


1) Revenue grew 7.8% year-on-year to S$947.3 million. The increase in revenue was on the back of strong contributions from new acquisitions which accounted for close to 80% of the increase in revenue.


2) Total operating costs followed suit increased by 7.3% to S$839.9 million. The increase in operating cost was due to staff costs associated with the new acquisitions.


3) As a result, operating profit rose by 12.2% to S$107.4 million.


4) Profit attributable to shareholders saw a 6.2% rise, from S$66.3 million to S$70.4 million.


5) Consequently, earnings per share moved from 3.06 cents to 3.25 cents, up 6.2%.


6) As of 31 December 2018, ComfortDelGro’s balance sheet had S$586.1 million in cash and bank balances, and S$569.9 million in total debt. This translates to a net cash position of S$16.2 million. This is lower year-on-year when compared to 2017 when ComfortDelGro reported a net cash position of S$273.9 million.


7) Operating cash flow, improved by 49.1%, from S$64.1 million a year ago to S$95.6 million. Capital expenditure, on the other hand, increased from S$37.7 million to S$95.2 million. This resulted in ComfortDelGro’s free cash flow dropping sharply by 98.5%, from S$26.4 million S$0.4 million.


Outlook


ComfortDelGro Managing Director/Group CEO, Mr. Yang Ban Seng, commented,


“The robust first quarter’s results show growth from the new acquisitions as well as existing businesses. The acquisitions we made in the last year have started to reap returns and we expect that they will continue to do so. We will continue to grow our core businesses, look at investment opportunities and explore new areas for growth, particularly in those that leverage technology and strengthen our core expertise.”


ComfortDelGro’s share price ended trading on Tuesday at S$2.57, resulting in a price-to-earnings ratio of 18.4 and a dividend yield of 4.1%.


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Motley Fool writer Esjay contributed to this article. Esjay does not own shares in Comfortdelgro.


The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Tim Phillips doesn’t own shares in any companies mentioned.


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1 Simple Number for Understanding 3 Important Areas of SBS Transit Ltd’s Business
- Original Post from The Motley Fool Sg

SBS Transit Ltd (SGX: S61) operates public bus and rail services in Singapore. The company is a subsidiary of local land transport giantComfortDelGro Corporation Ltd (SGX: C52).


Today we’re digging deep into SBS Transit’s return on equity, or ROE.


The choice of ROE


We’re using one metric — the return on equity, or ROE — to understand SBS Transit’s business. This financial metric gives investors important insight into a company’s ability to generate a profit using the shareholders’ capital it has.


A ROE of 20% means a company generates 20 cents in profit for every dollar of shareholders’ capital invested. In general, the higher a company’s ROE, the more profitable it is. A high ROE can also be a sign that a company has a high-quality business.


It’s worth noting that the use of high leverage — which increases the financial risk faced by a company — can also increase a company’s ROE.


Calculating the ROE


The ROE can be calculated using the following formula, which is the way many investors do it:


ROE = Net Profit / Shareholder’s Equity


The metric can also be calculated using a different approach, as shown below:


ROE = Asset Turnover x Net Profit Margin x Leverage Ratio


Calculating a company’s ROE in this way will reveal three important things: How well a company is managing its assets, how efficient it is at turning revenue into profit, and how much financial risk it could be taking on. You canlearn moreabout this formula for the ROE.


With that, let’s turn our attention to the ROE of SBS Transit.


The actual numbers


Asset turnover measures the efficiency of a company in using its assets to generate revenue. It is calculated by dividing a company’s total revenue by its assets. SBS Transit had total revenue of S$1.38 billion and total assets of S$1.06 billion in its fiscal year ended 31 December 2018. This gives it a good asset turnover of 1.30.


The net profit margin measures the percentage of revenue left as profit after deducting all expenses.In 2018, SBS Transit had a low net profit margin of 5.8% given its net profit of S$80.1 million and revenue of S$1.38 billion.


Lastly, we have the leverage ratio, calculated by dividing a company’s total assets by equity.Ahigher ratio means a company is funding its assets with more liabilities, resulting in higher risk.In 2018, SBS Transit had total assets and total equity of S$1.06 billion and S$498.4 million, respectively, giving it a healthy leverage ratio of 2.13.


When we put all of the numbers together, we arrive at a strong ROE of 16% for SBS Transit for 2018.


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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned. The Motley Fool Singapore recommends SBS Transit Ltd.


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