How Does ComfortDelGro Corporation Ltd Make Money?
It is important to know what a particular company does and how it makes money before investing in it. Investing in a business without such knowledge is akin to travelling to an unknown territory without a map.
On that note, let’s check out what business ComfortDelGro Corporation Ltd (SGX: C52) is involved in and how it generates its revenue.
ComfortDelGro is one of the largest land transport companies in the world operating buses, taxis, trains, and rental vehicles. It has a presence in Singapore, the United Kingdom, Ireland, Australia, China, Vietnam and Malaysia.
Let’s take a look at the table below for the revenue contribution from all its business segments for the financial year ended 31 December 2016 (FY2016):
Source: ComfortDelGro Corporation Ltd Annual Report 2016
Revenue from the public transport services segment, which made up the bulk of total revenue for FY2016, is the income generated from running bus and rail services, scheduled transport services, coach rental services, and advertisement. The portion of the revenue from Singapore is derived from ComfortDelGro’s listed subsidiary, SBS Transit Ltd (SGX: S61).
Taxi revenue comes from renting out taxis, operating taxi bureau and advertisement.
The third largest segment of revenue in 2016 was automotive engineering services. In this segment, ComfortDelGro is involved in maintenance and repair services, construction of specialised vehicles, assembly of bus bodies, crash repair services, engineering services and sale of diesel.
Revenue from inspection and testing segment comes from providing vehicle inspection services, and non-vehicle testing, inspection, and consultancy services. Majority of the income for this business comes from ComfortDelGro’s listed subsidiary, VICOM Limited (SGX: V01).
The driving centre segment receives money by operating driving schools, the car rental and leasing segment derives revenue by renting and leasing of cars while the bus station segment generates revenue through commission income from fare collection.
Now that we know the basics of ComfortDelGro’s revenue streams, we can delve into other aspects of the firm such as its profitability, strength of its balance sheet, its cash-generating abilities and so on before deciding to invest in it.