ComfortDelGro has been on my watchlist since early this year, when it was trading at around $2.40. In my earlier post in February, I assigned a target price of $2.17 for CDG, on expectations that taxi earnings would be hit by the intense competition with private hire operators.
Subsequently, CDG ran up to a high of $2.70 before going on a prolonged decline, and closed at a price of $2.08 yesterday. When CDG hit $2.17 a month ago, I did not initiate a position because I felt that its fundamentals have worsened. I have summarised my thoughts on CDG.
Strong Financial Position
With $606.6 million in cash and cash equivalents and $377.1 million of borrowings, CDG is in a net cash position of $229.5 million. Some investors have suggested that CDG invests its cash outside of its core transportation business, similar to what SPH has done by venturing into the property segment.
Consistent Free …