Category: SMRT
SMRT – JPMorgan
FY09 results in line, dividend maintained
• FY09 results in line, DPS maintained: FY09 earnings came in at $162.7MM (+8.5% Y/Y). A final DPS of 6 cents was declared, bringing full year DPS to 7.75 cents. This is the same as FY08. As a result, payout ratio decreased to 72% from 78%, against a minimum payout ratio of 60%.
• MRT ridership grew 8.7% in FY09 against 7.9% in FY08. However, management guided that lower growth should be expected in ridership in FY10. Coupled with the reduction in fares from 1 April onwards, 1Q10 MRT revenue is expected to be lower Y/Y. Circle Line Stage 3 will commence operations in May 2009. Management expects CCL to be lossmaking until all the stages are opened from 2010. We estimate CCL to break even only from FY2012 (2H CY2011 onwards).
• Buses and taxis ended the year in the red: While full year bus ridership was up 3.9%, the segment ended the year with a $4.5MM operating loss although it turned around with a slight operating profit of $0.8MM in 4Q09. Taxis’ losses deepened to $6.3MM due to lower hired-out rate and disposal losses of taxis. Management expects the performance of the taxi business to recover in FY10.
• Risks of losing tenants remains low: Rental revenue and operating profit was up 37% and 39% Y/Y, respectively. Management highlighted that it has not seen pressure on rental rates due to the strong human traffic in its MRT stations in line with ridership growth. Recent rental renewals were in fact at marginally higher rental rates. Tenancy contracts generally last 3 years. However, CCL Stage 3 does not add meaningfully to new lettable space and being all underground stations, CCL will also have relatively less rental space than the above-ground MRT lines.
• Maintain Neutral: We trimmed our earnings forecast for FY10/FY11 by 4%/5% as we reduce our ridership growth assumption for MRT from 8% to 7% as well as factored in potentially higher idle rate for SMRT’s taxis due to increasing competition from other taxi operators. We also maintain our DCF-based Dec-09 PT of S$1.80.
SMRT/ComfortDelgro – DMG
Land Transport Sector: ComfortDelgro and SMRT to join STI
ComfortDelgro (BUY\S$1.32\Target S$1.78)
SMRT (NEUTRAL\S$1.61\Target S$1.65)
effect from 23 Mar 09, with the next review scheduled for 10 Sep 09.
The changes reinforce our OVERWEIGHT stance on the land transportation sector. Positives
include public transport ridership growth in 2009 (although at a slower pace than in 2008) and lower crude oil prices, which will reduce diesel and electricity costs. Within the sector, we prefer ComfortDelgro, which has better potential for long term growth through its overseas operations – 42% of ComfortDelgro’s 2008 revenue came from overseas. Australia (7% revenue share) and China (8% revenue share) are potential growth drivers for ComfortDelgro.
ComfortDelgro, SMRT – BT
ComfortDelgro, SMRT in STI; Yanlord, KepLand out
ComfortDelGro Corporation and SMRT Corporation will join the Straits Times Index (STI) in place of Yanlord Land Group and Keppel Land.
This was disclosed in a joint release by Singapore Press Holdings (SPH), Singapore Exchange Limited (SGX) and FTSE Group (FTSE) on Thursday after the half-yearly review of the STI and FTSE ST Index Series.
The change, along with others, will take effect from the start of trading on Monday, 23 March 2009, with the next review scheduled for Thursday, 10 September 2009.
Transport – BT
Fare cut to cost SBST $42.7m, SMRT $37.3m
THE 4.6 per cent cut in bus and train fares will cost SBS Transit $42.7 million over 15 months, while the corresponding figure for SMRT Corp is $37.3 million, the two companies said yesterday.
On Thursday, the Public Transport Council announced that the fare reduction package would cost the two public transport operators about $80 million from April 1, 2009, to June 30, 2010. But both SBST, the dominant bus operator, and SMRT, which runs Singapore’s biggest rail network, said that they would only reveal the impact to their fare revenues the following day.
The fare rebate, starting on April 1, 2009, will allow adult commuters to save from two to 14 cents for a direct journey or a journey with one transfer.
In a statement, SBST said that the temporary relief measures will cost it ‘$42.7 million for the 15-month period’ – more than the $21.5 million it is expected to receive from last month’s Budget.
SBST chief operating officer Gan Juay Kiat said: ‘We hope that by reducing fares by an average of 5.1 per cent during these tough times, commuters will be able to get some relief from cost pressures.’
The 5.1 per cent figure is obtained after averaging the reductions in fares for SBST’s basic bus and train services, as well as its non-basic or premium bus services.
SMRT also said that it would give commuters further rebates on its premium and express bus services. It said that together with the discounts on these non-basic bus services and a $300,000 donation announced in January to help needy commuters, ‘these measures by SMRT to help commuters reduce their transport costs and cope with the economic downturn amount to $37.3 million in the next 15 months’.
‘This amount exceeds the savings SMRT will receive from the government budget,’ said SMRT in a statement.
‘We have reduced train and bus fares to help commuters of basic services cope with the downturn,’ said SMRT Corp president and CEO Saw Phaik Hwa.