SMRT – Phillip

Within Expectations

3Q Results. SMRT reported 3Q revenue of S$202.1m (+7.3% yoy) and net profit of S$38.3m (-5.9% yoy). The growth in revenue was due to higher ridership, improved taxi average hired-out fleet and growth from rental and advertising.

On a nine-month basis, revenue of S$593.6m was 6.7% better yoy while the ninemonth net profit of S$115.8m was 16.2% higher yoy.

Performances by various businesses. SMRT registered growth in revenues from all its operations. There was strong growth in MRT (+6.4% yoy), LRT (+5.1% yoy) and taxi (+10.5% yoy) operations while the buses operation posted minor growth in revenue (+1.4% yoy). The increase in average daily ridership resulted in the growth in revenues from the train and buses operations while the higher average hired-out fleet caused the growth in taxi operations. Furthermore, SMRT also saw growth in revenues from rental, advertising as well as engineering and other services.

FY08 Outlook. Management expects revenues from all its operations to increase in 4Q FY08. However, operating expenses are also likely to rise.

Maintain HOLD recommendation, target price at S$1.70. SMRT has posted financial results within our expectations. Moreover, it continues to register increases in revenues and profits. This is a defensive stock for investors who would like to hold for payment of dividends. Based on our discounted cash flow model, the fair value is S$1.70.

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