SMRT – Lim and Tan

• The $900 mln to be spent over 8 years to deal with the ageing rail infrastructure ($112.5 mln pa) will likely unnerve investors first. And merely saying it will be co-funded with LTA does not help either.

• What would be helpful would be for the authorities to clarify that LTA will be responsible for the infrastructure replacements, and SMRT for replacing what needs to be replaced of the operating assets.

• Assuming 50-50 split, which is too simplistic, but which works out to $56 mln a year for SMRT.

• Point is SMRT presently spends about $30 mln a year on repairs and maintenance.

• We have earlier downgraded SMRT to a HOLD.

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