Revenue for the quarter increased by 5.4% (vs 2Q17)
Group operating costs increased by 6.5% (vs 2Q17)
Group operating profit fell by 2.1% (vs 2Q17)
Net profit decreased by 5.5% (vs 2Q17)
Not something fantastic or surprising as we saw drop in operating and net profit. Some might deemed that as a set of negative result. Now this is what it is stated in the 2Q18 earning report however if we took another perspective to analyze the result, things look totally different.
The following is a record of ComfortDelGro Operating and Net Profit for successive quarters from 1Q17 till 2Q18.
| Period | Operating Profit | Diff | Net Profit | Diff |
| 1Q17 | 100.5M | -- | 82.5M | -- |
| 2Q17 | 111.9M | +11.4M | 79.4M | -3.1M |
| 3Q17 | 111.5M | -0.4M | 80.1M | +0.7M |
| 4Q17 | 85.3M | -26.2M | 59.5M | -20.6M |
| 1Q18 | 95.7M | +10.4M | 66.3M | +6.8M |
| 2Q18 | 109.5M | +13.8M | 75M | +8.7M |
There is practically a dive in profit (both operating and net) from 1Q17 (might be even earlier in 2016) to a low in 4Q17 then the recovery from 1Q18 onward. It is behaving like a V-shape trajectory.
Now the outlook cited in its 2Q18 earning report is as followed :-
1. Revenue from the Public Transport Services Business in Singapore is expected to be higher. Revenue from the Australia Bus Business is expected to be higher whilst revenue from the UK Bus Business is expected to be maintained.
2. Revenue from the Taxi Business is expected to maintain with stabilization in Singapore and the recent acquisitions in China, Australia and UK.
3. Revenue from the Automotive Engineering Services Business is expected to be maintained.
4. Revenue from the Inspection and Testing Services Business is expected to be maintained.
5. Revenue from the Driving Centre Business is expected to be maintained.
6. Revenue from the Car Rental and Leasing Business is expected to be maintained.
Based on the above outlook and at the rate of recovery from the table above, it will be no surprise in 3Q18 the earning headline will become a positive one with both operating and net profit of 3Q18 better than 3Q17.
3Q18 Operating profit just needs another S$2M from 2Q18 to equal that of 3Q17. Given that ComfortDelGro has been getting more than S$10M increase in Operating Profit for the past 2 quarters, it is very difficult to see how they cannot achieve that.
3Q18 Net profit just needs another S$5.1M from 2Q18 to equal that of 3Q17. Given that ComfortDelGro past 2 quarters of Net Profit both increases by more than S$5M, hence it is also very possible to achieve that target.
So is 2Q18 earning that really negative ? If one just look at the surface it might be but if one be more analytical and dig into the underlying, it presents a different picture. It will even be more interesting to see how market reacts to the 2Q18 result. Should it react ugly meaning they ignore the underlying, there is only one conclusion, opportunity presents to investors.
Note :-
I do not have any holding in ComfortDelGro share in my portfolio
I will not be adding any to my portfolio for this bull cycle since 2009 despite the optimism I've analyzed
I just want to do a very unbiased analysis which you can't find in analysts report despite the fact that they are being licensed to give analysis.
Note :-
I do not have any holding in ComfortDelGro share in my portfolio
I will not be adding any to my portfolio for this bull cycle since 2009 despite the optimism I've analyzed
I just want to do a very unbiased analysis which you can't find in analysts report despite the fact that they are being licensed to give analysis.
