Can Cabcharge Australia Limited win the fight against Uber?

Cabcharge Australia Limited (ASX: CAB) released its FY 2018 half year results. Here are the highlights:

  • Revenue was up 13.8% to $90 million
  • Cabcharge had a net loss of $5.1 million which was substantially lower than the previous half year period which included a loss on disposal of a discontinued operation
  • The fleet size is now at 1,352 cars following the Queensland yellow cabs acquisition
  • An interim fully franked dividend of 4 cents per share was announced

Cabcharge also recorded a non-cash impairment charge of $12.2 million for its taxi licence plates following a similar impairment charge of $7.9 million during the June financial year.

That’s not surprising following the experience in New York City, a city famous for its yellow cabs among other things. Taxi medallions in the Big Apple (the licence required to operate a yellow cab) used to sell for over US$ 1 million and in recent times, some have sold for as low as $105,000 according to the New York Times. The US not only has Uber, but also Lyft as the main disruptors in the taxi industry.

Cabcharge management are obviously aware of this threat and are heavily investing in technology initiatives such as the 13CABS app and the adoption of the Alipay payments system.

The Cabcharge share price has fallen 86% since its peak in 2007 and it remains unclear how much of the Uber effect has been priced in.

What is clear however is that Cabcharge is in an industry that has been undergoing major disruption. While it remains Australia’s number one taxi network, I’m not too optimistic about the long term.

Instead of investing in the disrupted, I’d rather invest in the disruptors. Today’s growth companies and tomorrow’s blue chips can be found in companies that are redefining their industries.

In the report below, we identify three companies on the ASX that we view as disruptors. I encourage you to have a read and learn more about them!

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Motley Fool contributor Kevin Gandiya has no position in any of the stocks mentioned.

You can follow Kevin on Twitter @KevinGandiya.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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