SMRT

[a74henry]

SMRT is hardly a social enterprise.

U & I should get a consistent service that gets us from point A to point B at a reasonable price.

Ex-CEO Ms Saw has done a great job by introducing non-transport related income to supplement the cost increases and also increase its profitability, bringing the SMRT share price from about $0.60 to about $2 during her leadership. Her shortcoming is the repair & maintenance team.

The current CEO is using money to do the repair & maintenance & staffing. Looking at the recent quarterly result, the chance of a fare hike is high.

[countonme]

It will never happen here, with all the 'control' in place. Nevertheless, every society mus progress. It is left to be seen if Sg can progress only economically and not socially. I have trust the scholar-leaders will find us a balance

Communist countries did it, by making the whole country as social enterprise. We all know the consequences.

[chialc88]

Henry, at this moment, I sense that fare hike is unlikely and un-thinkable. (this might be the reason for the delayed reworked reported)

I also sense that GOV will not allow fare increase (especially for the lower income group) due to the asset re-balancing exercise.

Moving forward, SMRT priority is to spend money and not worry about profits. Profit will be taken care of ....


A Life not Reflected is a Life not Worth Living.

[CityFarmer]

Communist countries did it, by making the whole country as social enterprise. We all know the consequences.

Actually Singapore has shown that social enterprises like NTUC and HDB can be done very well

Problem with communism is their utopian belief hence faulty assumption about human behavior and incentive system.

NTUC and HDB have been doing well, as private enterprises in disguise as social enterprises.

There was one public critic on HDB been too profit oriented, right? IIRC, you are one of them advocating that here.

[Andrewgoh]

the report

http://frmcommittee2012.files.wordpress....-5-nov.pdf

[chialc]

I quickly glance thru the report and this is how I feel:
1. removal of ROTA - benchmark profits cap
Exactly what SMRT wanted aka +ve

2. roll-over of fare hike to subsequent year
instead of previously, un-approved fare hike disappear, now these un-approved fare hike will be keep for next year adjustment, aka big big +ve

3. concessions funding by both GOV and adult commuter
* Feb 2013, TOR was given to the FRMC to increase concessions mechanism. This could be a reason for the delayed report.
Both GOV and adult commuter (wo concessions) will be paying for the LIW (Low Income Worker) and PWD (People with Disability), aka +ve

4. Energy index to be included
Energy cost escalated from 10+ to 20+%, hence the inclusion of energy as part of fare increase is proposed, aka another big +ve

5. Distance fare revenue allocation between road and rail mode
SMRT can shift the fare revenue % higher to road/bus fare.

** Frame on **
I read this Distance fare thingy with wide interest.
If I'm SMRT, I'll play this card carefully to maximize my profits and yet could get away.
You see, now, Singapore choose to use Hub transport model, aka you're expected to take a feeder bus to MRT station. After you alighted from MRT station, again you might also need to take a feeder bus to your destination.
This seems to be the strategies to get the mass to move within 1 hour at a most fuel efficient system.
SMRT could really benefits from this strategy by pricing it's road and rail fare carefully.
** Frame off **

The following was not so good chages:
1. Kept "cost-minus" model
SMRT wanted a "cost+plus" model but status quo aka remain as "cost-minus".

2. Substainability - LONG TERM
Financial viability/substainability of SMRT was mentioned a few times. I couldn't felt the passion from the FRMC. It's merely highlighted in long term, SMRT need to be profitable. My guts feeling is FRMC is not too keen to gives higher profits to SMRT but merely sufficient for it to keep going. I even felt that short term wise, FRMC will be ok with a -ve for SMRT, only things that FRMC kept repeating is LONG TERM so I thought short to medium term SMRT will not get its mercy.

I guess the report is not un-expected.
Since 2009, tough control of fare hike, discourage concessions, lower customer satisfactions sparked a huge public outcry.
It's time to spend money and both GOV and adult commuters will need to shoulder the cost of improvement (not SMRT).

[ForeverAlone]

thanks for the insights, I am quite bullish now on SMRT and comfort delgro~ ^^

[ForeverAlone]

the bus business had been such a drag, I think in future things will turn around~

[chialc]

Hi ForeverAlone,
Yes, definitely the sky is clearer for both SMRT and Comfort Delgro.

If you read the report, big big word that our GOV must pull up their socks.

TOR in Feb 2013 further clarifies and confirmed that our GOV responsibilities to take care of the LIP and PWD (not SMRT).

My only concern is our general in SMRT (unlike his predecessor) will not be so keen in pushing for highest profitability for shareholder.

Instead, likely he will choose to spend more and bleed the organisation.

I guess that's where the balance is.

LHS: GOV take up more cost
RHS: CEO spend more money

[Dividend Warrior]

My only concern is our general in SMRT (unlike his predecessor) will not be so keen in pushing for highest profitability for shareholder.

Instead, likely he will choose to spend more and bleed the organisation.

I guess that's where the balance is.

LHS: GOV take up more cost
RHS: CEO spend more money

I share the same concern.

The general's first priority is to improve service levels, reliability and commuters' satisfaction. I dun think he is chasing after profits as aggressively as Mdm Saw. He also need to take care of smrt staff too. The staff cost has increased significantly.