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ComfortDelGro Declares a Special Dividend: 7 Things You Should Know About the Land Transport Giant’s Latest Earnings

·5-min read
Comfort Taxi
Comfort Taxi

Happy days are here again for ComfortDelGro Corporation Limited (SGX: C52), or CDG.

With more COVID-19 restrictions being relaxed in countries where the group is operating, the land transport giant has reported a better set of financial numbers for its fiscal 2022’s first half (1H2022).

In addition, CDG also declared a special dividend of S$0.0141 per share, rewarding shareholders from the gains it made from the disposal of a London property.

What makes this payout extra special is that it is the first time in 15 years that the group has done so.

Chairman Lim Jit Poh also indicated that the group is open to paying out special dividends should there be extraordinary gains in the future.

Here are seven other highlights from CDG’s latest 1H2022 earnings.

1. Significantly higher operating and net profits

Revenue for the group inched up 6.7% year on year to S$1.86 billion.

Operating profit edged up 2.9% year on year to S$136.8 million, but last year’s operating profit had been boosted by COVID-19 government reliefs.

Stripping the relief out, operating profit would have surged by 67.8% year on year as economies opened up.

Finally, net profit rose 30.4% year on year to S$118.7 million, helped by a S$38.8 million net gain on the disposal of a property (see point 2).

2. Gain on disposal of property

CDG’s results this round were boosted by the gain on the sale of Alperton property in the UK of S$37.2 million.

As a result, the group’s cash flow statement reflected a nearly four-fold jump in proceeds from the disposal of fixed assets, from S$16.1 million to S$63.1 million.

Free cash flow for 1H2022 remained healthy at S$126.7 million, though this level is less than half the S$271.4 million generated in the prior year.

3. A mixed performance by region

Singapore was, by far, the largest contributor to CDG’s operating profit once again at 72%.

Next in line was Australia at 28% of group operating profit excluding disposals and government reliefs.

However, when it comes to performance between regions, the results were mixed.

Singapore saw its operating profit more than double year on year to S$91.5 million for 1H2022.

Australia’s operating profit dipped slightly from S$37.8 million to S$36 million but China saw a near-70% year on year plunge in operating profit due to COVID restrictions.

Elsewhere, the UK and Ireland saw a significant narrowing of operating losses but still posted a small operating loss of S$3.4 million.

4. Higher profits from public transport and taxi divisions

Public transport services made up close to 80% of CDG’s group revenue but makes up around half of group operating profit.

With more people riding on public transport, operating profit for the division inched up from S$82.5 million to S$85.6 million.

However, the Taxi division saw revenue fall 6.5% year on year to S$211.3 million principally due to lockdowns in China and lack of contributions from the London and Vietnam taxi businesses following their divestment in 2021 and this year, respectively.

On the bright side, operating profit for this division rose 18.4% year on year on the back of an increase in Singapore taxi revenue.

5. Dividend yield above 4%

CDG declared an interim dividend of S$0.0285, up 35.7% year on year from 1H2021’s S$0.021.

Together with the special dividend of S$0.0141, the total dividend announced this round came up to S$0.0426.

Coupled with last year’s final dividend of S$0.021, the trailing 12-month dividend stood at S$0.0636, giving CDG’s shares a trailing dividend yield of 4.4%.

6. Driving growth in four segments

CDG plans to drive growth through investments in four business segments.

These are rail, electrification, logistics, and non-emergency medical transportation.

In 1H2022, the group’s 50% joint venture, Auckland One Rail, made its maiden contribution to group revenue.

Investors can look forward to more acquisitions or partnerships in these four areas in the coming quarters.

7. A cautious business outlook

CDG sounded a cautious tone for its business outlook.

High energy prices will negatively impact the public transport services division, and the impact of fuel indexation for public bus contracts remains unclear.

Rail ridership in Singapore and bus and coach services in Australia and the UK are expected to improve, but taxi revenues in China continue to be badly impacted by the country’s COVID-zero policy.

Meanwhile, high inflation rates will put pressure on margins for the group.

Amid the challenges, CDG will carry on looking for suitable investments in smart and green mobility and continue to look for growth opportunities.

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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.

The post ComfortDelGro Declares a Special Dividend: 7 Things You Should Know About the Land Transport Giant’s Latest Earnings appeared first on The Smart Investor.