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3 Things to Like About ComfortDelGro Corporation Ltd’s Latest Earnings

ComfortDelGro Corporation Ltd (SGX: C52) is one of the largest land transport companies in the world, with operations in several countries, including Singapore. Earlier this week, the company announced its financial results for the second quarter ended 30 June 2019. Here are three things to like about its latest results.

Overall growth in business

ComfortDelGro’s overall business grew year-on-year. For the reporting quarter, revenue improved by 4.2% year-on-year to S$980.8 million mainly due to strong contributions from the acquisitions made in 2018 and growth in its public transport services business, partially offset by the weakness in the taxi business due to keen competition.

Total operating costs went up by 4.1% due to higher staff costs, which was necessary to support the growth in business, and higher repairs and maintenance costs. With that, operating profit climbed 5% to S$115.0 million while net profit increased by 1.2% to S$75.9 million.

The company went into a net debt position during the quarter but its balance sheet is still healthy. As of 30 June 2019, it had S$84.2 million in net debt (cash balance of S$553.2 million and total debt of S$637.4 million) versus the net cash position of S$16.2 million (cash hoard of S$586.1 million and total debt of S$569.9 million) at the end of 2018.

A slight disappointment for the quarter was that operating cash flow decreased, falling 28.4% year-on-year to S$147.1 million.

Higher dividend

Shareholders will be happy to note that ComfortDelGro has increased its interim dividend.

For the 2019 second-quarter, the company declared a dividend of 4.5 Singapore cents per share, up 3.4% from 4.35 Singapore cents per share dished out a year ago. The latest dividend translates to a payout ratio of 66.6%, above its dividend policy of paying out at least 50% of net profit as a dividend.Source: ComfortDelGro Q2 2019 financial results presentation

At ComfortDelGro’s closing share price of S$2.51 on Wednesday, it had a dividend yield of 4.2%, which is above that of the SPDR STI ETF (SGX: ES3), an exchange-traded fund (ETF) that tracks the fundamentals of the Straits Times Index (SGX: ^STI). As of 14 August, the ETF had a distribution yield of 3.8%.

Investing for the future

Ending off the earnings report, ComfortDelGro said that it “will continue to pursue growth through acquisitions and investments in new technology in the mobility space while transforming and building capabilities to strengthen its existing businesses”.

The key is, though, for the company to integrate the new acquisitions well into its existing businesses to create synergies. At least ComfortDelGro is trying to diversify its business further and position itself for the future demands of the economy.

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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.