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26-04-2012, 07:26 AM
The Straits Times
Apr 26, 2012
SMRT stock derailed by $900m upgrading plan
By Christopher Tan
TRAIN operator SMRT Corp's share price took a beating yesterday after it announced a $900 million upgrading package to address a spate of breakdowns.
The stock fell 7.5 cents or 4.14 per cent to close at $1.735, just above its 12-month low of $1.725, with 4.8 million shares changing hands.
It came on a day when the benchmark Straits Times Index ended 5.41 points higher, at 2,979.78 points.
The trigger was Tuesday's surprise announcement of a $900 million package to renew and upgrade its operating assets and rail infrastructure on the ageing North-South and East-West lines.
Although SMRT said the bill will be split with the Land Transport Authority (LTA), investors were obviously jittery over what could be a period of profit dilution.
Nomura Singapore transport analyst Lisa Lee said she has had a neutral recommendation on SMRT shares for the past year while the consensus of analysts polled by Reuters is between hold and sell.
Ms Lee said that even before the $900 million upgrade package was announced, she was expecting the company's capital expenditure to be around $600 million this year and $300 million next year, largely on new train purchases.
The figures are far higher than the $100 million or so it has been spending in recent years, Ms Lee added.
She said the additional budget for the upgrading programme might also impact dividend yield, although she has not been able to meet its management to get a clearer picture.
SMRT interim chief executive Tan Ek Kia would not comment on how the outlay might impact profitability.
'The figure is still indicative, and we are still in talks with the LTA on a co-sharing arrangement,' he said on Tuesday.
He added that the company might have to spend more money 'if more measures are recommended' by a Committee of Inquiry convened to investigate last December's massive breakdowns.
Industry watchers also point to a suspension of the annual fare adjustment exercise this year.
Transport Minister Lui Tuck Yew announced this last month, saying 'we should not rush to implement this year's fare adjustment' while the public transport fare adjustment formula is being reviewed.
SMRT's Mr Tan noted however that public transport ridership is expected to continue growing.
Apr 26, 2012
SMRT stock derailed by $900m upgrading plan
By Christopher Tan
TRAIN operator SMRT Corp's share price took a beating yesterday after it announced a $900 million upgrading package to address a spate of breakdowns.
The stock fell 7.5 cents or 4.14 per cent to close at $1.735, just above its 12-month low of $1.725, with 4.8 million shares changing hands.
It came on a day when the benchmark Straits Times Index ended 5.41 points higher, at 2,979.78 points.
The trigger was Tuesday's surprise announcement of a $900 million package to renew and upgrade its operating assets and rail infrastructure on the ageing North-South and East-West lines.
Although SMRT said the bill will be split with the Land Transport Authority (LTA), investors were obviously jittery over what could be a period of profit dilution.
Nomura Singapore transport analyst Lisa Lee said she has had a neutral recommendation on SMRT shares for the past year while the consensus of analysts polled by Reuters is between hold and sell.
Ms Lee said that even before the $900 million upgrade package was announced, she was expecting the company's capital expenditure to be around $600 million this year and $300 million next year, largely on new train purchases.
The figures are far higher than the $100 million or so it has been spending in recent years, Ms Lee added.
She said the additional budget for the upgrading programme might also impact dividend yield, although she has not been able to meet its management to get a clearer picture.
SMRT interim chief executive Tan Ek Kia would not comment on how the outlay might impact profitability.
'The figure is still indicative, and we are still in talks with the LTA on a co-sharing arrangement,' he said on Tuesday.
He added that the company might have to spend more money 'if more measures are recommended' by a Committee of Inquiry convened to investigate last December's massive breakdowns.
Industry watchers also point to a suspension of the annual fare adjustment exercise this year.
Transport Minister Lui Tuck Yew announced this last month, saying 'we should not rush to implement this year's fare adjustment' while the public transport fare adjustment formula is being reviewed.
SMRT's Mr Tan noted however that public transport ridership is expected to continue growing.
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