In recent weeks, the Wuhan coronavirus has created fear in many industries including transport and recreation. According to CDG, the driving center in Nanjing has been temporarily closed. This further decreases investors’ confidence on the counter. In Singapore, fewer tourists will come to the island reducing the number of people patronizing cab and other transport services. Until the Wuhan virus is properly controlled, such fears and negative impacts on business will continue to exert selling pressure.
Personal Insights on CDG businesses
As mentioned in previous posts, CDG has been largely progressive in terms of restructuring its business in the face of overwhelming competition from Grab and others. Besides its main taxi rental business, CDG is also expanding sustainably into other countries to diversify its operations. Its subsidiaries such as Vicom and SBSTransit are also in essential businesses that will likely support its parent company during difficult times.
As for how CDG will continue to grow in SG will depend on the future of public transport networks in Singapore. Upcoming budget 2020 will shed light on this matter and SBST will likely benefit from 2020 budget. However, we are still uncertain how much positive impact it will bring to the counter.
General Trend (monthly chart)
Technical Analysis summary
Price has undoubtedly lost support since uptrend support at 2.33 broke. In fact, the dip was made worse when Wuhan Virus was declared a major issue in the world. Until there is positive news, I would not expect long term recovery from the counter. Do practice caution and accumulate only if you can hold for at least a few months. As writing in the first post of the year, this year is the year to accumulate blue chips so it will be wise to look at the longer-term.
Author’s Call as of 1 February 2020
- CDG is heading for the downward trajectory
- Wuhan surprise attack made its mark and continues to exert pressure
- Budget 2020 might come in handy (15 Feb)
- Revenue might be flat on 14 Feb from the previous year partly due to a drop in cab rentals but an increase in the Public transport business.
Author’s Call (as of 7 December 2019)
- CDG has high chance of recovery after market closing on 6 Dec
- Accumulate at 2.39 to 2.42 if possible (unsure of opening price on 9 Dec)
- Next profit taking will be around 2.45 for some (do exercise restrain)
- Suggest waiting for the price hike effect to kick in on Dec 28 before taking profit.
