SMRT

Chairman's speech:

RECAP OF FY13 RESULTS
7 Let me first recap our results in the last Financial Year:
• REVENUE: Our Group revenue increased 5.9% to $1.12B.
• OPEX: Our operating costs however increased 12.4% from $931M to $1.05B, chiefly
due to increases in Repairs & Maintenance of an ageing network to meet operational
and service standards (+32.7%), wage adjustments to maintain our market
competitiveness (+16.2%) and higher depreciation because of our larger asset base
(+14.2%).
• PROFIT: These higher operating costs in the absence of fare adjustments, and the
impairment of interest in our associate in Shenzhen, have led to a lower profit of
$83.3M. We were obliged to make the impairment in recognition of the
uncertainties surrounding new regulatory policies on subsidies for public bus
operations, and competition from new developments within the local transport
sector.
• DIVIDEND: In line with the lower profit last year, the total declared dividend is 2.5
cents, amounting to 45.6% of the FY2013 PATMI of $83.3M. We have had to reduce
our dividend payout this year as a prudent measure to keep a healthy cash balance
in view of the higher expenditures anticipated. There are understandably some
concerns from shareholders about whether this signals a shift in dividend policy. The
Board will be in a better position to guide on this when we have greater clarity on
the outcomes of a new rail financing framework and bus operating model. We
expect both these developments to improve our long term sustainability.

Fast forward:

Finally, we are committed to ensure Sustainable Growth and deliver shareholder
value. Looking ahead, I am optimistic about our longer term growth prospects:
4
• There are local rail opportunities that we will capitalize on. As Singapore
doubles its rail network in the coming years to meet the needs for a growing
population and economy, we will build on our dominant rail engineering and
operations expertise to participate fully in all the opportunities that are
presented.
• More immediately, we will continue with our discussion with Government on a
new rail financing framework that will allow for more predictable cash flows and
a more sustainable financing model. The Minister for Transport acknowledged
in Parliament the “very real financial pressures faced by the PTOs”, so we believe
there will be strong impetus to find a feasible solution that meets the needs of all
stakeholders. There are many details that will need to be ironed out for this new
framework to work well, but we will ensure that the interests of our
shareholders are preserved, and will work toward a favourable and early
outcome.
• The bus business has been running losses, and we are working with the
authorities to resolve the structural issues and improve its viability. Judging
from statements made by the authorities, and the recent tenders for the new
City-Direct routes, we assess that the move towards greater contestability will
see a shift towards an operating model based on cost plus margin. We
welcome this, and are preparing for this eventuality. As this model will see
operators paid a fixed fee for services based on defined performance metrics, we
aim to turn around the bus business from our current losses in the near term.
• We intend to grow our profitable taxi business. Our taxi business has more than
doubled its profit to $6.4 million from the year before. We will continue to
capitalize on growth opportunities with a newer and larger hired-out taxi fleet.
• Our non-fare business is also doing well. When the Woodlands Xchange opens
this year, and the Sports Hub is ready in early 2014, we will double our retail
space to 76,000 sqm. We intend to continue to diversify our revenue streams by
leveraging our commercial strengths in retail, media and advertising. There are
some who have expressed concern that this may dilute our emphasis on our core
transport operations, but I wish to assure that less than 2% of our headcount is in
Commercial business, and remind that non-fare business generates more than
half the total Group profits.
• And finally, we will develop our overseas strategy to diversify and increase our
revenue. There are immense opportunities in international markets for growth.
We have only made a modest start and hope to do more. Most recently, we
joined a consortium to participate in the Jakarta Monorail project. --> Not soo positive..

I seriously doubt SMRT can turn their bus business around unless the govt approves of a fare hike.

Also, while taking the mrt daily, I notice that SMRT hires staff with a simple job (at bedok, eunos, paya lebar) of telling passengers to move into the centre of the carriage. I think it is a bit waste of manpower

This part caught my eyes... less than 2% of headcount but more than 50% of group profits...
They should really consider REITing out or leasing out all the available retails spaces in the MRT...

This seems viable from business pt of view...The fare or core business is really fully subject to the whims and fancies of the politics, i.e. “gone-case” business…


************
Our non-fare business is also doing well. When the Woodlands Xchange opens
this year, and the Sports Hub is ready in early 2014, we will double our retail
space to 76,000 sqm. We intend to continue to diversify our revenue streams by
leveraging our commercial strengths in retail, media and advertising. There are
some who have expressed concern that this may dilute our emphasis on our core
transport operations, but I wish to assure that less than 2% of our headcount is in
Commercial business, and remind that non-fare business generates more than
half the total Group profits.

Reiting its commercial space is difficult because many of their mrt stations are on 30 yr leases and some have about half left. Upon renewal of lease, it is unlikely that LTA will give them much slack if LTA knows they are making so much money from these retail spaces. the reit will be worse than SPH's. Since LTA bears the cost of constructing the stations

Their performance has been good for the earlier years. Why has it dropped so much and so fast recently?

The delay means highly probability of fare hike... Good news for public transport operator, SMRT...

(not vested)

Fare review report won’t be rushed: Transport Minister Lui

SINGAPORE — Transport Minister Lui Tuck Yew will not put a “hard target” date for the Fare Review Mechanism Committee (FRMC) to submit their recommendations on the formula and framework for public transport fare adjustments.

“I would not want to pre-empt them (FRMC),” he said today (Sept 2). “The more important thing is that they do a thorough job and they have a very strong basis for the recommendations they make.”

http://www.todayonline.com/singapore/far...nister-lui

(01-08-2013, 08:54 PM)CY09 Wrote: I seriously doubt SMRT can turn their bus business around unless the govt approves of a fare hike.

Also, while taking the mrt daily, I notice that SMRT hires staff with a simple job (at bedok, eunos, paya lebar) of telling passengers to move into the centre of the carriage. I think it is a bit waste of manpower

This will likely happen after 2016. Now there are many leaks in the roof, so effort is spent to patch them. I think anyone who invest in SMRT will only see fruit after 2016. And provided its a land slide victory.

Now dropped to $1.285. Glad I unloaded at $1.50. This counter is a goner.

the fundamentals are just no good, for transport counters comfort delgro seems a lot better than smrt

The px is merely extending its downtrend that started way back in July 2010 during which the px reached a high of ard $2.31.

Once clamoured by investors, today its a pale shadow of its old self. Burdened by bleeding transportation business, high maintainance capital exp, fuel charges and labour cost...........

Light if any, at the end of the tunnel, is still quite a distance away no thanks to the amount of time taken to review transport fare px increase. And in the event of transport fare px adjustment, it is expected to be a nominal increase..... hardly enough for SMRT to start paying fat dividends again............