SMRT

[pianist]

amid oil price in free fall


Public transport fares will not be increased by more than 2.8 per cent next year, said Transport Minister Lui Tuck Yew.

This is lower than the original roll-over figure of 3.4 per cent from the last fare review in January, and is largely due to a fall in energy costs.

"We know that energy costs have come down, as compared to 2012 ... The maximum that is allowed for this particular fare increase will be 2.8 per cent," said Mr Lui said in an interview with Channel NewsAsia (CNA).

January's review announced a fare hike of 6.6 per cent, to be adjusted in two tranches - a 3.2 per cent increase in April, and the remaining 3.4 per cent carried forward to the current review. With lower energy costs, the latter figure has now been revised to 2.8 per cent.

The fare formula is based on four components - core CPI (consumer price index) inflation, average wage increase, energy index, and productivity index.

The Public Transport Council (PTC) started its annual fare review last month, and results are expected to be announced in the first quarter of next year. The PTC told CNA that it will consider this fare adjustment of 2.8 per cent for the current review exercise.

Public transport operators SMRT and SBS Transit have until Friday (Dec 19) to submit their applications for a fare increase to the PTC, subject to approval by the Council.
- See more at: http://transport.asiaone.com/news/transp...tFoSt.dpuf

[SLC81]

Bus and train fares will go up by 2.8 per cent from April 5, 2015

http://www.straitstimes.com/news/singapo...5-20150121

[CityFarmer]

I will post a link of this post over the ComfortDelgro thread. With the sell-back, Singapore bus business model will shift to asset-light model.

(not vested)

ComfortDelGro, SMRT may get $1.15 billion selling bus assets to govt: Deutsche Bk

SINGAPORE (Jan 27): ComfortDelGro ( Financial Dashboard) and SMRT ( Financial Dashboard) could get receive $850 million and $300 million respectively from selling their buses and related assets to the government under a new operating model that will free up bus companies to improve service standards, says Deutsche Bank.

The bus service operating licences of SMRT and SBS Transit ( Financial Dashboard), a unit of ComfortDelGro, expire in August next year and will not be renewed.

Instead, under the so-called government contracting model, the Land Transport Authority will determine the bus services to be provided and invite operators to bid for the right to run these services, which will be bundled into 12 packages, each of which will require about 300 to 500 buses.

Successful bidders will be paid fees to operate the services, and the fares collected will be retained by the government, which will also own all bus infrastructure, including depots and buses.

"We believe the government will acquire bus assets from incumbent operators SBS Transit and SMRT, as it is too late to place new orders for the initial batch of buses under the government contracting model," Deutsche Bank analysts Joe Liew and Joshua Lee wrote in a note.

The new operating model will require about 4,500 buses to work, they said, and some of these buses will be needed from 2H2015 for the first package.

According to the analysts, the net book value of SBS Transit's bus assets is about $1 billion, while that for SMRT is $400 million, but these assets are likely to be sold to the government at a discount. "While the amount is still large, it seems more politically palatable to purchase assets at a discount," they said.

With the cash, ComfortDelGro is likely to pursue acquisitions and even pay a special dividend, while SMRT is expected to pare down a $350-million debt due in October 2017, they said.

SBS Transit and SMRT are not expected to win the tenders for the first few packages, they added, as the purpose of the tender is to inject more competition into the bus industry.
http://www.theedgemarkets.com/sg/article...eutsche-bk

[SLC81]

Q3 result released. All looking good for SMRT.

Local train and bus operator SMRT posted on Wednesday a 58.4 per cent rise in net profit for the fiscal third quarter, helped by higher rental income and a sharp reduction in losses from its bus operations


http://www.channelnewsasia.com/news/busi...24612.html

[yohowslife]

3Q15 profits are up significantly due to higher operation profits from its train and bus businesses. additional fare hike this year coupled with lower fuel costs should continue to benefit the company. however, the pe is too expensive at 28.5 based on its annualised year to date earnings due to the share price increasing more than 65% over the last 12 months. full article below.


http://www.investark.com/Analysis18smrt3q15.html

[crosscalibre]

smrt has a PE of 29. i am wondering what has happened that investors will be willing to pay for such a high PE. is their rental division going to be contribute more to their income or their rail division?

i was looking at their report but did not find any clues. does anyone have any opinions on this?

[piggo]

PE29, probably reflective of the government support it receives... regardless of breakdowns, fires, short circuits, security lapses etc.

When it's less profitable, fare increases are inevitable. When it loses money, government will buy back their equipment.

[Raks]

smrt has a PE of 29. i am wondering what has happened that investors will be willing to pay for such a high PE. is their rental division going to be contribute more to their income or their rail division?

i was looking at their report but did not find any clues. does anyone have any opinions on this?

2014 full year EPS was 4.1cents. 3Q2015 9months eps is at 4.6cents.

When 3Q2014 announced, 3.0/3*4 the estimated EPS was 4 cents. The price then was ca 125 cents. PE was close to 30.
Today's closing at ca 170 cents, the PE is 28. Based PE alone, it's "cheaper" today.

When company has low earnings, the price would be supported by the NAV - it can't fall too low. This could create a high PE, low PB situation. Even if SMRT has 0.1 cents eps, price would probably floor at 27 cents at ca 0.5 x P/B and 270 x P/E. I would buy at this price because I know SMRT will not lose their business. Maybe this is why P/B for SMRT never hit 1.
P/B for SMRT in year 2013 was even lower than in year 2008, 2009 when we had the financial crisis.

SMRT is supposed to be a non-cyclical counter due to it's nature. But in Singapore, it's usually the transport operator losing money and then LTA approve fare hike. And then oil cycle. All this generates a small waves I suppose.
Kallang wave mall is not that bad and I'm seeing more and more shops opening.
Generally, all recent news are good for SMRT, I would expect optimism on SMRT.

(not vested)

[CityFarmer]

SMRT and SBS, are the two lowest bidders. The bus biz still very important to both companies...

Singapore bus contract win can be positive for SMRT, SBS: OCBC

SINGAPORE (Mar 20): Singapore's Land Transport Authority released the names and bids of short-listed vendors for routes on the western part of the island.

SMRT Corp. ( Financial Dashboard) and SBS Transit ( Financial Dashboard) were the two lowest bidders. OCBC ( Financial Dashboard) says the incumbents are reeling under losses from their core bus operations, thus suffering from a negative operating margin.

However, the brokerage says even if the margin under the new contract is lower than the 9% benchmark, the bus operations of both the companies will turn profitable immediately.

Still, OCBC investment research says there is a downside risk too, and that is when the current bids are used as a benchmark for future contracts, it would result in lower-than-expected margins.

SMRT is trading 0.3% lower at $1.59 while SBS Transit is down 1 cent at $1.72 as at 2:45 p.m.
http://www.theedgemarkets.com/sg/article...t-sbs-ocbc

[Ben]

Following its JV with Toshiba in 2014 to market its PMSM system on the world market, it is now JV with Faiveley Transport to provide MRO services in SEA, except Thailand, Taiwan and Hong Kong. Another initiative by the company to go aboard. Ironically, I think, because of its “failure” in Singapore, in terms of trains breakdowns, it has over the years built up the experiences to provide MRO services. If not I believe Faiveley would not have wanted to partner with SMRT. Is this turning adversity into opportunity? I continue to place my faith on Desmond Kuek and his team to bring SMRT to greater height.

http://infopub.sgx.com/FileOpen/Media_Re...eID=342909