Transport – Phillip

Exciting times ahead

Additional platform at Jurong East Interchange

The construction works on the additional platform and tracks are visible now and slated to be completed in 2012. The additional platform will potentially reduced the train's headway time from 3.2 mins to 0 mins and trains approaching the middle platform do not have to arrive and depart from the same platform. It will also ease congestion at the station, as currently the NS line arrivals are unable to match the frequency of EW line during peak periods. LTA also mentioned that they intend to purchase more trains to increase the frequency and shortened the waiting times for MRT. We believe that this is a positive step forward to encourage more people to take the public transport as waiting and traveling time is foremost on commuter's mind.

COE premiums to spike as vehicle quota system is tweaked

LTA has announced that it will change the way it decide on COE supply to ensure that vehicle growth is kept strictly at the targeted rate. The change has caused COE supply for the April to July period to fall 28% and COE premiums are expected to spike with the impending fall in supply. The reduced supply will aid the government's drive in encouraging more people to take the public transport and reduce congestions on the road. We believe more people will switch to taking public transport as owning a car is becoming more expensive and the motor industry's estimate that COE premiums will hit S$30,000 in the near future. SMRT is set to benefit the most with its strong rail network while Comfort Delgro might be hit with higher costs in replacing its fleet of taxis.

Tourism showing strong rebound in 2010

The Singapore Tourism Board (STB) announced a 23% increase in its forecasts for visitor arrivals in 2010, translating to about 12 million tourists. This is good news for the industry as majority of the tourists will be using public transport to travel around Singapore. We feel that MRT and taxi will be the most commonly used, bringing them to the various attractions in Singapore in the shortest time.

Train riderships maintaining strong growth

MRT riderships continue to grow strongly as reflected in the table above registering a 3.98% year on year growth and 2.83% on a rolling basis for Nov-Jan period. Going forward, the opening of more new lines, improved connectivity and affordable fares will continue to fuel riderships growth. LTA expects circle line to add an additional 200,000 to riderships daily when all circle line stations are opened.

On the other hand, bus riderships are showing a decline of 1.11% year on year and a decline of 1.3% on a rolling basis, which could be attributed to the improved rail network and opening of more train stations. Declines will likely continue when circle line (highlighted in the map below) opens next month and we will see more commuters switching over to trains.

We continue to rate SMRT (Buy: Fair value: S$2.19) as our top pick for its strong exposure to the rail network in Singapore over Comfort Delgro (Hold: Fair value S$1.68).

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