SMRT

[specuvestor]

Actually 10% is nothing to sneeze at. Not many companies in the Industrial or transport sector have that kind of ROA on a CONSISTENT basis. In fact if your portfolio does 10% CAGR, you would double your money in 7 years, not exactly shabby. Probably also why Buffett also like to use 10% coupon for his preference share plays.

These are ROA extracted from Bloomberg:
SMRT(SPORE) MRTC(HK) CD
2003 4.08 4.37 5.08
2004 5.60 6.26 7.3
2005 8.59 7.67 6.9
2006 7.53 6.63 7.96
2007 9.80 11.00 6.97
2008 10.65 5.26 5.98
2009 11.07 5.74 5.89
2010 10.56 6.73 5.40
2011 10.10 7.75 5.25
2012 7.13 6.69 5.28

So we can objectively see the "tonnes of money" before the current backlash from the public, and yet still higher than pre 2004.

And yes depreciation is part of operating expense of the company and shareholders should pay for. I don't see the logic of why public should pay for their operating expense, nor pay for wall street banks' bad debts.

Yes, ROA of 10% is respectable, but not qualify for "tons of money" IMO. A simple stock search for SGX with ROA of 10%, gives a total of 138 listed companies, although i have to admit that i am not able to search with criteria of sustainable 5 years ROA.

The logic of co-funding of assets for public transport are at least the followings IMO
- to allow bus operator continue to operate non-profitable routes in remote locations or new estates.
- to allow train operator provides service to losing route in early stage e.g. CCL at early stage.

In 2009 SMRT has $163m net income and $343m EBITDA, that's the ton I'm talking about since it is about half of COE income for the govt.

Yeah there are many lumpy ROAs especially for those in the EPC type of business. Maybe you can list out some that looks remotely stable business ie Buffett type of business and we can look deeper, for my benefit also Even SIA which is recognised as the star in the airline business which is 1) highly supported by the govt and 2) highly commercial, only has ROA of 8.63% in 2007 and 0.91% in 2010

And yes the universal coverage is a main contention of pte enterprise vs public enterprise. Another reason why public services should not be listed to serve 2 masters. But I am not against corporatising within the public sector umbrella, just as I am not against reasonable salary peg of ministers. Public services, including military defence, are inherently LOSS MAKING, as they are funded by tax income. A lot of people are being brainwashed in the Singapore Inc era that these services should be profitable. Put in another way, if public services are profitable, why do we need to be taxed?

On the other hand early losses in viable projects are not rare in corporate finance or collateralised project financing... these are done at municipal levels all the time.