Hit by Disruptive Innovations – SPH and Comfort Delgro

Two well-known companies were languishing in their stock prices. The Singapore Press Holdings (SPH) and Comfort Delgro were doing well in the past.

Over a one-year period, share price of SPH dropped from $3.77 to $2.76 on 31 August 2017. This was a drop of 26.7%.

Share price of Comfort Delgro declined 26.9% over a year from $2.75 to $2.01 on 20 September 2017.

Both suffered similar kind of declines in share prices.

Comfort Delgro owns a large taxi fleet in Singapore. The taxi segment is hit by private hire industry such as Uber, Grab. These private hire companies are shaking up the taxi scenes in Singapore and overseas. Suddenly Comfort Delgro faces competitions from these new players. We can recall the taxi industry was somewhat a closed and highly regulated industry not too long ago. Hailing and calling for a taxi during wet weather were frustrating. Now this has changed when private hire cars were allowed to operate in Singapore. With competition, revenue and profits of Comfort Delgro took a hit.

Singapore Press Holdings’ core media business came under pressure with lower advertisement revenue and circulation revenue (both 2015 and 2016 FY). The challenges facing SPH are the digital space for news. News is freely available on the Internet. The attention span of readers of newspaper print is getting shorter. Readers prefer bite size news reporting since there are so much things happening in this digital world that are screaming for attention. Readers also want news to be free.

In this disruptive innovation world, what can old establishments do to keep up with new challenges? That is the million-dollar question that chief executive must grapple with. Can these CEOs deliver in the new economy?

Copyright © 2017, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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