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ComfortDelgro: AK replies to comments.

Thursday, December 2, 2021

After getting two comments from readers on ComfortDelgro, I feel that it might be a good idea to publish my second reply as a short blog. 


To read the comments as well as my reply to the first comment, please check the comments section of this blog: 


This is my reply to the second comment: 

For sure, ComfortDelgro is facing headwinds. 

To stay invested or not, we will have to ask if the problems they are facing now are temporary or are they here to stay? 

I am inclined to believe that the problems will not be permanent. 

However, now we have the Omicron variant of COVID-19 that recently popped up. 

So, it could take longer before a sustained recovery happens.


In my analysis done a few years ago, I said that even if ComfortDelgro were to shut down its taxi business, it would still be able to pay an attractive dividend. 

That was partly how I made the decision to invest in ComfortDelgro as an investor for income. 

Shutting down a business if it is no longer viable is not a bad thing, generally speaking. 

I like to think that we will eventually conquer the COVID-19 virus. 

However, the slow rate of vaccination in many parts of the world as well as irresponsible behavior such as vaccine hesitancy is allowing the virus to mutate. 

These are some root causes for uneven recovery and a delay in sustained recovery. 




Still, I am staying invested in ComfortDelgro and getting paid while I wait for the eventual recovery. 

Selling now feels like it could be a mistake. 

Of course, I could be mistaken. 

Reference: 


18 comments:

garudadri said...

Dear AK
Agree with your view as regards not selling. I am at a reasonable paperless despite buying more last year plus dividends accrued and I will hold. In fact, I would say that the odds are that I might add more in small amounts at 1.35 and below in theory only. Nevertheless, this would happen only with a bigger sell off and I would prioritize others such as
The banks
Wilmar
ST Engineering
Simply because of better margin of safety and quicker recovery, especially the banks. Wilmar is under a sentiment cloud on account of its China exposure but food and staples should hopefully not get caught in the crossfire
ST Eng seems to have built up a robust order book and offers a near 4% and safe yield as I type
For an income investor like me, these 5 stocks appeal although CDG will recover as well. The dividend restitution at CDG will lag
Regards
Garudadri

AK71 said...

Hi Garudadri,

Sounds like you have a well thought out plan.

It cannot be overemphasized the importance of having a plan that is tailored to suit our circumstances, beliefs and goals.

References:
1. Have a plan...
2. Investing with some common sense...

Compoundingdividendxdividend said...

Dear AK

can you talk to yourself regard to this news?
Brokers' take: Olam could replace ComfortDelgro in STI, says CGS-CIMB

https://www.businesstimes.com.sg/companies-markets/brokers-take-olam-could-replace-comfortdelgro-in-sti-says-cgs-cimb

Thanks in advance

AK71 said...

Hi CDXD,

Hope you don't mind me shortening your very long nickname. ;p

There isn't much to say other than it doesn't affect the fundamentals of ComfortDelgro nor my decision to stay invested.

AK71 said...

Updated this blog on 3 Dec 21 with a new chart:
Invest in Alibaba Group?

Alibaba stock price is trending ever lower.

The stock price is now 25% lower than it was when the blog was published.

The bearish trend is not only strong but very persistent.

Could be a long winter.

The Dreamzola Traveller said...

I got holdings in ComfortDelgro as well. For now, I see its business model still functioning to keep the business sustainable in hard times. Ya sure, profits are lesser, so are the others. Hard times are more about staying sustainable, I don see any possibility of a major uptrend for a long time. This pandemic certainly messed up a lot of things.

AK71 said...

Hi TDT,

Unfortunately, the COVID-19 pandemic is exhibiting strong staying power.

It could turn out to be a longer than expected battle because we are giving the virus room to mutate.

Ignorance, selfish behavior and even malicious spreading of fake news all make things worse.

Even in Singapore, when I go for my evening walks, I see so many examples of irresponsible behavior.

What to do?

I am investing in ComfortDelgro mainly for income.

As long as they continue to pay a reasonable dividend given the difficult times, it is a blessing.

garudadri said...

Dear AK
The opportunities to lock into a higher yield plus potential capital growth are in my opinion, best realizable with our three local banks. They are however higher still as the 2-year US treasury yields are higher at 0.60 as I type, predicting a faster taper and/or earlier interest rate rise
This might not happen if the Omicron spread overwhelms the world with restrictions and worsening of trade
The supply logjam then will translate into higher inflation and this would mean higher rates and possibly even accelerated rate increases
This will once again benefit the financials
On the contrary, our REITS might drop and we can look forward to locking into them for higher yields again!
I have constructed my SG portfolio this way with a 2:1 based ratio for Banks:REITS
This will ensure capital protection to a reasonable extent barring the rare black swan event like a major war or repeat of COVID events, like last year. God is great and hopefully that will not happen
Garudadri

AK71 said...

Hi Garudadri,

The COVID-19 pandemic has been and still is a great challenge for the world.

Increasing my investment in the local banks during the recent bear market hopefully makes for a more resilient investment portfolio.

Of course, not all will agree with me but that is only natural.

We just have to do what we feel is right and hope for the best.

Good luck to all of us. :)

Sunny said...

AK

Can talk to yourself about SIA Engineering, seems very strong

Thanks

AK71 said...

Hi Sunny,

I talked about SIA Engineering a long time ago.

Cannot find the blog by now.

I remember saying I preferred ST Engineering over SIA Engineering.

What SIA Engineering does, ST Engineering does too but SIA Engineering does not do most things ST Engineering does.

SIA Engineering's business is less resilient and has too much concentration risk for my liking.

Of course, this does not mean that SIA Engineering cannot be a good investment.

In fact, it was doing very well until the COVID-19 pandemic shows how vulnerable its business model is.

My plate is full but SIA Engineering could have a place in someone else's portfolio. :)

john said...

Hi Ak, your plate look quite full and consists of many stocks. Have I ever thought rationalize it into a more focused portfolio?

AK71 said...

Hi John,

I think 10 to 20 stocks in a portfolio is OK.

Also, my largest investments are IREIT Global, AIMS AMP Capital Industrial REIT, DBS, UOB and OCBC.

These 5 form the bulk of my portfolio based on market value.

So, if we look at it this way, my portfolio is pretty focused. ;p

Oh, we mustn't forget my largest "investment" is CPF.

Yes, I know.

Bad AK! Bad AK! ;p

john said...

https://www.businesstimes.com.sg/companies-markets/brokers-take-dbs-raises-tp-for-far-east-hospitality-trust-to-s078-on-central

This article look interest at initial look. But hospitality had quite sometimes for pandemic hardship.

AK71 said...

Hi John,

I have published my reply in a blog:
Should I invest in Far East Hospitality Trust?

john said...

Thank you ,ak.

SgFire said...

Cdg is still a pain in my portfolio together with centurion. Pray they recover soon

AK71 said...

Hi SgFire,

If something is causing you pain, you might want to re-evaluate its place in your portfolio.

ComfortDelgro and Centurion are two of my larger investments but their underperformance isn't causing me any pain as other investments in my portfolio are bringing home the bacon.

Of course, I still look forward to the day they recover from the pandemic. :)


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