Most of the companies had reported their financial results, as of the end of last month.
During the earnings season, I was keeping a close watch on three blue-chip companies that make up the Straits Times Index (SGX: ^STI). While their stock prices have been hammered over the past few years, these firms could rise again in the future.
Let me lay out the reasons for my optimism on these companies, starting with the first one, in a three-part series.
Company #1: ComfortDelGro Corporation Ltd (SGX: C52)
ComfortDelGro is one of the largest land transport companies in the world with operations in seven countries, including the Lion City.
The company provides transport services for the daily commuter. In recent times, however, its taxi business was hit by the proliferation of ride-hailing apps such as Grab and Uber. The latter has since ceased operations in Singapore. With the exit of Uber, ComfortDelGro’s taxi business appears to have stabilised. In the 2018 second-quarter earnings release, the taxi company’s managing director, Yang Ban Seng, said:
“With a more rational competition landscape, the recruitment of taxi drivers has improved leading to a higher utilisation of the fleet. To meet this growing demand, we are also expanding the taxi fleet.”
As a signal of intent, ComfortDelGro placed orders for 1,000 hybrid taxis to be delivered by 2019.
Since the start of 2018, the land transport outfit has also invested S$269 million in various acquisitions, both in Singapore and overseas. Due to the “aggressive expansionary policy”, revenue increased by 5.4% for the second quarter of 2018.
“The new businesses that we acquired towards the end of last year and earlier this year in Australia, the United Kingdom (UK), China and Singapore have started making their maiden contributions to revenue and profits. They will continue to do so going forward. The deal pipe-line remains strong and we hope to conclude more deals in the coming months to grow the business.”
On top of monitoring the taxi business, I’ll be watching how much the new businesses contribute to ComfortDelGro’s growth in the months and 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 contributor Sudhan P doesn’t own shares in any companies mentioned.