- Despite escalating trade tensions and the US’ unprecedented tariffs, we do not expect any significant impact to ComfortDelGro’s earnings, given the defensive nature of its businesses.
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Defensive earnings.
- Given the escalating trade tensions between the US and China, coupled with uncertainty surrounding global economic growth driven by the US’ unprecedented tariffs, we believe that ComfortDelGro (SGX:C52) will remain relatively unaffected by the ongoing trade measures due to the defensive nature of its business operations.
- Approximately 50% of ComfortDelGro’s annual revenue and 60% of its annual operating profit are derived from domestic operations, implying little impact on both its top and bottom lines. Furthermore, close to 85-90% of ComfortDelGro’s operating costs are attributed to costs such as staff and insurance costs which are unaffected by the tariffs.
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- Lastly, given the defensive characteristics and demand inelasticity of the transport sector, we expect ComfortDelGro’s earnings to remain largely stable even in the event of an economic recession.
Increasing overseas exposure.
- Read more at SGinvestors.io.
