SMRT – Lim and Tan

We are less concerned today about the fate of the 6.75 cents per share final dividend for ye Mar ’12.

While hearings before the Committee of Inquiry will last 6 weeks, yesterday’s opening session (essentially “finger pointing” by LTA, which owns the train infrastructure, and SMRT, the operator) suggests the final outcome may not be as dire for SMRT as feared immediately after the Dec 15/17 incidents.

(Indeed, SMRT’s share price has “rebounded” above the many-times tested $1.73 technical support since the train operator announced on Mar 28th it had completed its internal investigations into the unfortunate incidents.)

SMRT asserted it has even exceeded the maintenance requirements set not just by LTA but manufacturers of the metal wheels of the trains, and that the ageing infrastructure is to be blamed.

SMRT has been paying 8.5 cents a share for a few years now, costing $129 mln based on latest issued capital. Profit for 9 months ended Dec ’11 has amounted to $106 mln, and operating cash flow of $200 mln. Besides, SMRT has $182 mln cash after reducing borrowings by $100 mln to $150 mln.

SMRT will release results for Q4 / Full year ending Mar ’12 on Monday Apr 30th.

The 4.8% yield justifies at least a HOLD.

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