Category: SMRT
Land Transport – BT
PTC gives nod for net 1% hike in bus, train fares
THE Public Transport Council (PTC) has allowed an overall net fare adjustment of one per cent, and operators SBS Transit and SMRT can expect a combined increase in annual revenue of $15 million.
From Oct 8, 2011, adult card fares for buses and trains will go up by two cents a journey, while senior citizen concessionary card fares will increase by one cent a journey although senior citizens will now get concessionary travel all day throughout the week.
Child/student concessionary card fares remain unchanged. But cash fares for adult bus and train rides will be 10 cents higher per trip across-the-board. There will be no change to senior citizen and child/student cash fares.
The PTC said that overall, the average fare increase translates to about 15 cents a week or about $8 a year for the 85 per cent of commuters who would experience a fare increase.
In July, the two public transport operators applied for the maximum fare adjustment of 2.8 per cent allowed under the fare formula for 2011, citing rising fuel and manpower costs.
‘The approved fare adjustment of one per cent is significantly less than the quantum of adjustment that the operators have applied for,’ said PTC chairman Gerard Ee.
He said that the decision comes after careful deliberation, and the council balanced the need to keep fares affordable with the long-term viability of the public transport operators so that they can continue to make capital investments and provide the expected quality of service.
Mr Ee cited the example of SMRT, which has already bought 238 new buses for $100 million to renew and expand its fleet from next month until December 2012, and SBST, which has purchased 600 buses for $268 million for delivery this year and the next.
‘We have tried to keep the fare adjustment small for commuters but we know that any fare adjustment, no matter how small, would still be felt by commuters, especially those from needy families,’ he said, adding that those who need additional assistance will get help from the government’s Public Transport Fund. To help needy families cope with the fare adjustment, the government together with SMRT and SBS Transit have set aside $4 million to fund 200,000 public transport vouchers.
Mr Ee also said that the PTC focused on senior citizens because of the greying population and to support moves to encourage them to work beyond retirement age.
The PTC said that the fare adjustment took into consideration Singapore’s economic outlook and the affordability of public transport.
‘The economic outlook remains positive with the latest forecast for GDP to grow by 5-7 per cent in 2011, and the latest unemployment rate as at June 2011 remains low at 2.1 per cent,’ the council said. ‘The public transport affordability indicator has also been on a downtrend for the past seven years, falling from 5.3 per cent in 2003 to 3.7 per cent in 2010. This indicates that bus and train fares have remained affordable for the majority of commuters.’
Under the fare formula, the maximum fare adjustment allowable is calculated by subtracting 1.5 per cent from the Price Index, where 1.5 per cent is the productivity extraction set for the five years from 2008-2012. As for the Price Index, it is derived from adding half of the change in the Consumer Price Index over the preceding year, to half of the change in the average monthly earnings for all workers over the preceding year.
The PTC delayed 2011’s fare adjustment to coincide with the opening of the final two phases of the Circle Line on Oct 8. The exercise usually takes place in the middle of the year.
This year’s hike comes on the back of two straight years of cuts. Last year, the PTC granted an overall 2.5 per cent reduction in bus and train fares and that took effect on July 3, 2010 with the introduction of Distance Fares. Under Distance Fares, the transfer penalty was removed completely, so commuters travelling the same distance pay the same fare for the same type of service, whether they travel direct or make transfers. Then, the PTC said that the 63 per cent of commuters who enjoyed fare savings spent an average of 48 cents a week less, or $25 a year. As for the 34 per cent of commuters who saw an increase in their public transport expenditure, the average increase was 31 cents a week or $16 a year.
In 2009, SBST and SMRT announced that they would not apply for fare adjustments that year due to the global financial crisis. Both worked with the PTC to pass back savings from the 2009 Singapore Budget, so that from April 1, 2009, commuters benefited from an overall 4.6 per cent cut in bus and train fares.
Under the fare adjustment formula in 2009, the public transport operators could have applied for an increase of up to 5 per cent. But before 2009, fares were increased in the preceding three years – 0.7 per cent in 2008, 1.1 per cent in 2007, and 1.7 per cent in 2006.
SMRT – BT
SMRT to add 119 train trips on two lines
SMRT will be adding 119 train trips each week on the North-South (NS) and East-West (EW) lines to shorten waiting times during non-peak hours on weekdays and Sundays.
It will also be extending the peak hour time period on the Changi Airport extension. The changes will kick in from Aug 15.
‘We noticed that there are more customers using our trains during non-peak hours and on late Sunday afternoons,’ said SMRT vice-president of rail operations Lui Wai Meng in a press release yesterday. ‘We’ve also seen an increase in demand on the EW line and Changi Airport extension during morning peak hours.’
With the changes, waiting times during non-peak hours will drop to around 4-6.5 minutes, from seven minutes.
Commuters who stand to benefit on weekdays are those using the NS line in the early morning, those on the EW Line heading towards the city in the late morning, and those travelling from the city towards residential estates in the north and east of Singapore after 8pm.
Peak hour service on the Changi Airport extension will be extended by 30 minutes – trains will come at a frequency of nine minutes from 8-9am on weekdays and weekends. On Sundays, eastbound passengers will experience a shorter waiting time of around four minutes, from 4.45-6.45pm.
This is the third round of train service enhancement that SMRT has introduced this year. Including this latest change, SMRT would have added more than 1,710 train trips weekly since 2008.
SMRT gained one cent on the stock market yesterday to close at $1.825.
SMRT – BT
Oct: Circle Line fully open; Dec: more NS, EW capacity
CCL will relieve crowding along N-S and E-W lines by about 10-15%
THE remaining 12 stations on the Circle Line will open for service on Oct 8, while capacity along the North-South and East-West MRT Lines will be increased from December.
Transport Minister and Second Minister for Foreign Affairs Lui Tuck Yew announced this yesterday after riding the Circle Line (CCL) from Labrador Park to Caldecott.
The 12 stations are from Caldecott to HarbourFront and part of the last two of the five CCL phases.
The orbital line has a total of 28 stations, the first five of which were opened in May 2009 and the subsequent 11 in April 2010.
Daily ridership on the CCL is now about 200,000 and when it is fully open, this number is expected to double to 400,000.
Mr Lui said the CCL will enhance connectivity of the rail network and cut travel time for many commuters.
‘For example, travelling from Bishan to Buona Vista will take only 26 minutes compared to 40 minutes today via the North-South and East-West Lines,’ he said.
He added that the full opening of the CCL will relieve crowding along the North-South and East-West Lines (NSEWL) by about 10-15 per cent.
‘With the completion of the Jurong East Modification Project and injection of the five additional trains since May, we have seen some improvement in train loading along critical stretches of the NSEWL. With these additional trains, LTA and SMRT are able to add more train trips during the peak period,’ said Mr Lui, referring to the Land Transport Authority and train operator SMRT Corp.
He said that to increase capacity, 17 more trains will be added by December along the NSEWL.
‘An additional 13 trains will be delivered around 2014-2015. Together, these 30 trains will enhance the capacity of the NSEWL by about 25 per cent,’ said Mr Lui.
Currently, however, the frequency of train services during peak periods is limited by the signalling system, which is undergoing an upgrade. When this is completed in 2016-2018, intervals between trains will fall from two minutes to 100 seconds.
‘However, I understand that LTA and SMRT are finalising plans to add more train trips to improve off-peak frequencies. These service improvements will be announced soon,’ said Mr Lui.
Peak hours may vary according to the distance of the station from the city centre but they are usually defined as 7-9am, and 5-8pm.
SMRT – BT
SMRT posts 8.9% fall in Q1 net profit
Company cites higher energy and staff and related costs
HIGHER energy costs were instrumental in SMRT Corp’s net profit falling 8.9 per cent to $34.8 million for the first quarter ended June 30, 2011.
Singapore’s biggest rail operator was also affected by higher staff and related costs, repairs and maintenance, and other operating expenses, although these were partially offset by lower depreciation.
Operating profit was 8.1 per cent lower at $42.4 million from a year ago even as Q1 revenue increased 7.5 per cent to $253.1 million mainly on higher rail and bus ridership.
The company also enjoyed higher contributions from the Circle Line, stronger taxi rental revenue as well as higher rental and advertising revenue, even as these were offset by a lower average fare for MRT and buses.
Earnings per share fell to 2.3 cents from 2.5 cents previously. No dividend will be declared for Q1.
Revenue from train operations rose 4.2 per cent to $135.0 million on higher ridership but operating profit slipped 18.6 per cent to $22.6 million mainly due to increased energy costs and staff and related expenses.
The group’s electricity and diesel costs in Q1 had surged 32.7 per cent to $40.0 million, while staff and related costs rose 10.9 per cent to $84.6 million with the bigger headcount for Circle Line operations, increased train runs and the absence of Jobs Credit.
As for bus operations, Q1 revenue rose 3.4 per cent to $54.3 million mainly on higher ridership. But operating losses ballooned to $4.4 million from $770,000 in the corresponding period the previous year due to higher diesel cost.
Taxi operations fared better with rental revenue up 15 per cent to $21.0 million mainly with a larger average hired-out fleet.
But operating profit was down 36.8 per cent to $414,000 from $655,000 previously because of higher depreciation and insurance costs.
Q1 rental revenue was stronger, increasing 10.8 per cent to $19.2 million and enjoying a 10.9 per cent hike in operating profit to $15.0 million.
Meanwhile, revenue from SMRT’s engineering and other services jumped 54.2 per cent to $14.0 million with the higher revenue from fleet maintenance and diesel sold to taxi hirers.
This included payment of $0.7 million received for Palm Jumeirah and recognised as revenue in the quarter.
Engineering’s Q1 operating profit of $3.3 million is in contrast to the operating loss of $1.1 million in the previous corresponding quarter’s, due mainly to the fact that no revenue was recognised in Palm Jumeirah while costs for the operation and maintenance there continued to be incurred.
SMRT shares closed half a cent higher at $1.88 yesterday.
Land Transport – DMG
Operators seek fare increase of up to 2.8%
SBS Transit and SMRT have both applied for fare hike of 2.8%, in accordance to the maximum fare adjustment formula set by the government-appointed Fare Review Mechanism Committee (FRMC) in 2005. Results of the application will most likely be announced in 4Q11 by the Public Transport Council (PTC). Given SMRT’s earnings are predominantly driven by Singapore’s train service (accounted for 58% of FY11 EBIT), it will experience the most impact compared to ComfortDelGro (CD). Our sensitivity analysis shows that a fare hike of 2.8% could raise SMRT’s and CD’s net profit by 11% and 6.6% respectively. Maintain OVERWEIGHT on the sector on the back of 1) resilient growth in ridership number, 2) potential fare hike, and 3) imminent award of Downtown Line in 2H11.
Maximum fare adjustment formula is tied to CPI, WPI and productivity gains. In order to cap overall fare increases in small, regular steps, the land transport operators are allowed to apply for fare adjustments according to FRMC-stipulated formula. Besides taking into consideration of the maximum fare adjustment request put forth by operators, the PTC also takes into consideration of other factors such as profitability of the two transport companies, as well as Singapore’s economic condition. This is evident from the fare adjustments carried out in 2008-2009 (2008: +0.7% fare hike; 2009: -4.6% fare hike) vs maximum allowable adjustments of +3%-+4.8% respectively. Our current estimates for both SMRT and CD are based on ~0.5% hike in fare prices of Singapore’s MRT and bus services.
Prefer CD within the sector. We continue to favour CD (BUY/TP S$1.80) over SMRT (NEUTRAL/TP S$1.94) due to the former’s 1) greater overseas growth potential, and 2) cheaper valuation. In addition to margin improvements from ridership increase, we think CD will be looking at acquisition of more land transport companies in foreign markets in order to achieve overseas growth. Separately, previous concerns regarding CD’s forex exposure due to its extensive overseas operations in UK & Ireland (9M10: 13% CD’s EBIT), Australia (9M10: 16% CD’s EBIT), and China (9M10: 12% CD’s EBIT) is overblown, evidenced from the minute forex impact on CD’s results in the last three quarters. Given the approximately even contributions from the emerging (China) and developed nations (UK, Ireland, Australia), we reckon the chances of adverse forex movement from sustained strengthening of S$ against the local currencies of CD’s overseas operations as low.