(Stocks Discussion) SGX: ComfortDelGro Corporation Ltd (SGX: C52)?

Currently compiling my report that i have saved from last year for confortdelgro @http://sonicericsg.blogspot.com/2019/06/post-10...

Business Profile: Most of us are familair with the blue and yellow taxis belonging to the CDG. But its business includes bus, taxi, rail, car rental and leasing, automotive engineering services, testing services, etc. CDD has been trying diversify its business model, espeically after the introduction of ride-sharing services like Uber, Grab and GoJek.

Risks: One of the key risk for CDG, as expected by most people, is how they are going to compete with the ride sharing apps like GoJek and Grab. The entry of GoJek and their now competitive pricing and vouchers have led to CDG's revenue segment shrinking. However, which acquisitions of subsidiaries and investments overseas, their overall isk has been hedged. The market may not price this into their valuation of this stock though. Since public transport serves as the biggest revenue segment, decrease in fare prices could also cause revenue here to drop.

Income Statement: CDG's revenue for FY18 has grown, but operating costs has seemed to grow proportionally such that operating income margins have increased slightly. The most significant increase in operating costs have actually been staff costs. The increase in revenue was driven by the public transport segment of operating the different train lines and bus services as well as overseas acquisitions. The increase was dampened slightly by the consistent decrease in revenue attributed to the taxi fleet.

Balance Sheet: CDG's current ratio is almost 1.3, which seems to suggest that CDG is liquid enough to cover their short term liabilities. CDG's debt to equity ratio is also relatively small at around 10%, which suggest that CDG is nicely levered and can meet its maturing debt and interest obligations. The more significant changes from FY17 and FY18 is the increase in goodwill from their acquisitions, and a paying down of short-term debt and increasing taking on off even more long-term debt.

Cashflow Statements: Operating cashflows have increased due to improvements in working capital. A slightly worrying sign is how their net capex (excluding acquisitions) is more than 33% of operating cashflows. Free Cashflow margins therefore is slightly over 10%. Motley Fool has suggested that the dividends being paid out is not sustained with proper earnings growth. If CDG continues their acquisitions, this leaves lesser FCF to be distributed as dividends. Investing cashflows wise, the biggest YOY change is the acquisitions of subsidiaries. Cashflow from financing activities have significant movesment in paying down of debt and taking of new debt.

Valuation: At a P/E ratio of 18.6, Simply Wall St argues that they are overvalued based on the Singapore market and based on the transport industry in Asia. P/B ratios as compared to the Asian transport market seems overvalued too. Their PEG ratio looks like it's overvalued also, since earnings growth have been dampened by poor taxi operations. However, their Discounted Cashflow approach actually concludes that they are undervalued based on a target price of $2.71. Personally, if the public transport sector can grow and they can expand more heavily into international markets, I would be more bullish on this stock.