Wednesday, January 16, 2013

SMRT

SMRT: Grp attended CS Asean Conference, whereby mgt clarified that while they have re-focused their attention on running rail operations, they will continue to pursue growth in the rental segment opportunistically. On growth outlook for the rental segment, mgt reiterated that they will be able to grow commercial lettable space by 5% in FY13 and that the JV at Sports Hub will start contributing to profits by 2015E (lower margins, nevertheless). Mgt also expressed optimism on bus fundamentals, on the increased chances of fare hikes and BSEP offsets. For the taxi business, while much of FY13’s fleet renewal needs have been covered, mget admits that a high COE price is the key impediment for its fleet expansion plan going forward. Finally, management has reiterated that its minimum dividend payout ratio of 60% will be maintainedNote however that payouts have been in excess of 80% over the past three yrs. CS maintains neutral with $1.60 TP.

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