Comfortdelgro share price under attacks

It is that “uh-oh” feeling for Comfortdelgro share price again. On 8 June 2023, Comfortdelgro share price plunged to a record low of $1.00. Notably, the collapse of Comfortdelgro share price came shortly after the release of a dismal 1QFY2023 business update on 18 May 2023 that saw operating profit collapsing 52% to reach $32.8 million.

In my previous article on this counter, I had expressed my concerns on the long-term prospect of this company. And the devastating crash of Comfortdelgro share price in June 2023 certainly vindicated my thesis. Should investors run for their lives?

Comfortdelgro share price

Comfortdelgro is a transport company with a total fleet size of about 34,000 buses, taxis and rental vehicles. SBS Transit, a listed company, is a subsidiary. Vicom, another SGX-listed company, is another subsidiary. For the past decade, Comfort Delgro has spread its wings overseas, with operations in Australia, the United Kingdom, New Zealand, China, Ireland and Malaysia.

Many investors must be feeling disgruntled at the terrible form of ComfortDelgro share price, which had declined substantially for the past 5 years. For sure, the explosive meltdown of the counter led to poor returns for many investors. As at 1 September 2023, Comfortdelgro share price was trading at $1.27. Although the counter has somewhat recovered more than 20% from the record low of $1.00 recorded in June 2023, the current Comfortdelgro share price is still a long way off the $2 to $3 levels seen during the pre-pandemic times.

Looking back, the woes for Comfortdelgro share price actually began in 2015, which saw the entry of Grab giving Comfortdelgro a run for its money. During that period, the wheels came off the wagon for Comfortdelgro share price, which crashed from a mighty $3.20 in June 2015 to a low of $1.90 in December 2017. Subsequently, pandemic arrived in 2020 to play a part in disrupting commuters’ travelling patterns as work-from-home practice became entrenched in Singapore. These upheavals in the taxi landscape combined to cause Comfortdelgro share price to buckle.

To be fair to the management, the 1QFY2022 financial result was boosted by the exceptional gain on disposal of Alperton property in London of $37.2million. Henceforth, a year-on-year comparison of the operating profit for 1QFY2023 will not accurately reflect the financial performance of the transport company. Nonetheless, short-sellers took the golden opportunity to hammer Comfortdelgro share price.BullionStarShort selling volume surged to a high of 25.7 million in early June 2023 and then peaked at 28 million in the week of 26 June 2023. The short selling activities must have led to Comfortdelgro share price to fall off the cliff in June 2023. Subsequently, the counter stabilized as short selling volume subsided in July onwards.

PeriodShort-selling volumeShort-selling value
15 to 19 May 202324.2 million$27.5 million
22 to 26 May 202316.6 million$18.7 million
5 to 9 June 202325.7 million$26.7 million
26 to 29 June 202328 million$32.4 million
7 to 11 August7.3 million$9.1 million
14 to 18 August 202320.8 million$26.6 million
21 to 25 August 20238.3 million$10.4 million

Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. I am not vested in Comfortdelgro at the moment. Whether Comfortdelgro share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.

Comfortdelgro share price a value-buy or value-trap?

In the past few days, I was quite tempted to invest in Comfortdelgro as I thought this could be an interesting turnaround play. The Price/Book Value is 1.071, suggesting that Comfortdelgro share price is being traded at just the book value. Also, the Group’s revenue had been increasing steadily in every quarter in 2022. Whilst revenue in 1QFY2023 dropped to $906 million vis-à-vis the $977 million in 4QFY2022, I believe this was due to the seasonal effect. As such, my opinion is that recovery should be in sight for Comfortdelgro share price based on the latest financial data. However, after reading the management response to shareholder queries on 21 April 2023, I decided to [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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