3 Interesting Facts About ComfortDelGro Corporation Ltd’s Small Businesses

ComfortDelGro Corporation Ltd (SGX: C52) is one of the world’s largest land transport companies. It has seven business segments and operations in seven countries (Singapore, China, the United Kingdom, Ireland, Australia, Vietnam, and Malaysia).

The company’s largest business segments are Public Transport Services and Taxi. In 2016, the two segments accounted for 89.8% of ComfortDelGro’s total revenue. The remaining revenue came from the other segments: Automotive and Engineering; Inspection and Testing; Bus Station; Car Rental and Leasing; and Driving Centre.

In the table below, you can see ComfortDelGro’s revenue broken down by business segments over the past five years:

Source: ComfortDelGro 2016 annual report

Given the size of these smaller businesses, investors are likely to give them less attention when researching ComfortDelGro. But, there are a number of interesting facts about these businesses, which I would like to share with you in this article:

1. Bigger weighting in operating profit

As mentioned earlier, the five small segments of ComfortDelGro accounted for only 10.2% of the company’s total revenue in 2016. But, they accounted for 25.2% of the company’s operating profit in the same year.

Source: ComfortDelGro 2016 annual report

In the table above, you can see the operating profits generated by each segment in the last five years.

2. Big contributor to operating margin

As a whole, ComfortDelGro’s operating profit margin stood at 11.4% in 2016. Yet, the other businesses had a combined operating margin of 28.3% in the year.

3. Asset light model

According to ComfortDelGro’s 2016 annual report, it had S$3.82 billion in total segmental assets. Of this, only S$0.25 billion – or 6.5% – were related to the group of small businesses. We can thus conclude that the smaller business segments of ComfortDelGro are much more profitable, with high operating margins and low asset requirements.

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