Category: SBSTransit
SBSTransit – BT
SBS Transit begins to introduce new buses
First 100 of 500 are being rolled out; the rest will be on roads in a year or so
SBS Transit has begun rolling out the first 100 of 500 new single-deck buses costing $36 million to provide better service.
Quality of Service standards introduced in September 2006 cover six aspects – bus service reliability, loading, safety, provision of information, availability and integration with other types of public transport.
Last year, SBS Transit beefed up maintenance and repair and replaced old buses with new ones to reduce the average age of its fleet. In 2006 and 2007, it introduced 200 new double-deck buses.
‘The goal is to cut waiting time so commuters spend less time travelling,’ chairman Lim Jit Poh said at the company’s annual general meeting this week.
‘This can certainly be attained – but it will be at a cost. We will need more buses and, in turn, more bus captains. The result? More investments.’
Each new bus costs between $360,000 and $500,000.
A further 400 new single-deck buses will be introduced in the next 12 months or so.
The total bill for all 500 single-deckers will be $180 million.
Mr Lim also spoke about the government’s recently announced land transport review and the impending introduction of competition to improve efficiency.
Existing public transport operators could end up with a lower market share if new operators enter the fray, he said.
‘But the absolute revenue may well be larger. The pie will get larger’ – as the government encourages people to take public transport.
‘In bus, our experience, acquired locally and overseas, puts us in good stead,’ Mr Lim said. ‘Competition is not new to us.’
He said he hopes to see a level playing field.
‘The same standards and treatment should be the guiding principles in the competition when it is introduced.’
For example, the government has talked about bearing the cost of building infrastructure such as bus depots.
‘It is therefore important that existing operators, which have been taking on these costs all along, receive similar assistance going forward,’ Mr Lim said.
Transport Sector – Kim Eng
21 January 2008
Turning Up the Heat
♦ Renewed push to boost public transport usage
The Land Transport Authority’s review of the public transport system – the outcomes were partially revealed last Friday – demonstrated the government’s determination to promote and increase public transport usage in the next 10 to 15 years. Amongst other measures, vehicle growth rate will be reduced and ERP charges increased, while integration between feeder buses, trunk buses and MRT will be enhanced.
♦ Upcoming threats to incumbents
With regards to bus operations, two measures to be introduced: 1) centralised bus planning by LTA by 2009; and 2) gradual introduction of more competition could hurt the bus operations of both ComfortDelgro (CD) and SMRT. Centralised bus operations would likely result in the two operators operating buses along less profitable routes, while the introduction of competition would affect the monopoly status that CD and SMRT currently enjoy in their respective areas of operations.
♦ Comparing bus operations of both operators
SBS Transit, CD’s 75%-owned subsidiary, operates approximately 2800 buses in Singapore and has a 75% share of the scheduled bus market. In comparison, SMRT operates a smaller fleet of approximately 900 buses. Notably, SMRT’s domestic bus operations contributed merely 1.4% to 1H08 operating profit (with an operating profit margin of 1.4%), while CD’s domestic bus operations contributed 13.9% of operating profit (with an operating profit margin of 8.5%).
♦ Premature to downgrade outlook for CD and SMRT
Though we think that the new measures from the Land Transport Review could hurt the bus operations of CD and SMRT, we reckon that it would be premature to downgrade our view of both companies. That’s as increasing public transport ridership could very well offset the above-mentioned negative impact on bus operations. We are thus maintaining our forecasts and target prices on both counters.
CD Price $1.61 Target $1.86
SMRT Price $1.73 Target $1.59