There are some of us who simply swear by public transport. I can think of no better way of getting around than to delegate the chore of ferrying me from A to B to someone else.
In ComfortDelGro (SGX: C52), we have a company that ticks many transportation boxes. It is not only one of the biggest taxi operators in Singapore, but it is also has its finger in buses and trains too. If that wasn?t enough, the company also has overseas operations and is even involved in testing the…
In ComfortDelGro (SGX: C52), we have a company that ticks many transportation boxes. It is not only one of the biggest taxi operators in Singapore, but it is also has its finger in buses and trains too. If that wasn’t enough, the company also has overseas operations and is even involved in testing the road-worthiness of private cars.
That is perhaps the first thing to like about ComfortDelGro. It provides a service that is likely to be in demand for as long as people want to get about. The business is not difficult to understand, either. Peter Lynch once said: “Never invest in a business that you can’t illustrate with a crayon.” So, according to the “crayon” theory of investing, ComfortDelGro would be: “A company that gets people from A to B and charges a fee for the service. Voila!
The next thing to like about ComfortDelGro is its consistent Return on Equity. Over the last three years, it has generated a return of around $10 for every $100 of invested capital. This compares well with the market average. The median RoE for the 30 companies that make up the Straits Times Index (SGX: ^STI) is also around 10%. ComfortDelGro’s steadiness is thanks to its reliably high Net Income Margin. It makes a net profit of around $7 for every $100 of turnover.
ComfortDelGro’s wide geographic spread is also an attractive attribute. Around three-fifth of the company’s revenues are generated in Singapore. Meanwhile, the UK and Australia are important sources of revenue too. They account for about a-fifth and a-seventh of total revenue. Other countries that ComfortDelGro has operations include China, Vietnam and Malaysia.
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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 doesn’t own shares in any companies mentioned.