01 July, 2017

ComfortDelGro: Below its 3 years low

This week, ComfortDelGro Corporation Limited (C52) is selling below its 3 years low. Fundamentally, it is not entirely a good stock and neither is it poor. Personally, I have bought some. This is the first stock in a long time I placed some doubt in a transaction. This is because averaging down may not be a good idea if the price were to drop even lower. Yesterday, its RSI has hit below the 30 range.

Here are some of the characteristics observed of C52:
1.     Despite the recent loss of ride-hailing market share to Grab and Uber, the net income of C52 has remained resilient. Its net income has been consistently rising over the past few years showing no signs of hindrance.
2.     It is a company with diversification of multiple countries and it does not solely depend of its taxi revenue (despite that it is what they are best known for)
3.      Dividends are attractive at around 4.4%. Payout history was continuous since 2003.
4.     P/E ratio is slightly above 15 while it is trading less than 2 times its book value.
5.     It is a company with adequate size: Around USD 3 billions in terms of capitalization.

The market has been negative about C52 as reflected in its price. We are not sure if sellers are letting go due to panic or due to ignorance. One possibility is that they may have bought it too high a price and can no longer tolerate the loss. As for me, I hope this is not a falling knife which I have caught. There is always a possibility to do a stop loss to avoid bigger losses. At the same time, I believed the price will recover soon enough. There has been some efforts made by C52 as shown in the news but is it enough?

Last but not least, the recent hype was on the IPO of Netlink Trust this month and I am interested to find out more if it is worth the risks. 

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