Monday, November 25, 2013

SMRT :Talking reforms, costs and long-term strategy (DB)

SMRT Corporation -
Management meeting: Talking reforms, costs and long-term strategy
Generally positive feedback from management meeting
We recently met SMRT’s CEO Mr Desmond Kuek and CFO Miss Catherine Lee. Apart from discussion on the business outlook, what we also found interesting was management’s comment that public perception of the company (as tracked on their Facebook page) had improved in recent months, with similarly encouraging trends in staff morale.


Key highlights of our discussion below.

Confidence in reforms stems from improved relationship with authorities
Management pointed to a significantly more collaborative relationship with the regulator (with greater involvement from policy makers) now, compared to 5 years ago. The CEO cited accelerated timelines for the asset renewal programme as reflective of the new relationship dynamics. Within this context, optimism was expressed that the bus segment would migrate to a more financially sustainable operating model before 2016 (a view echoed by CD management during DB-hosted group investor meeting earlier this week).

Management was of the view that implementation would be gradual, with selected parcels of bus routes being tendered over time. In lieu of uncertainties around rail asset management, management believes any change in operating model for this segment could take place at a later stage (in-line with DB view).

Near-term costs to remain high, but unlikely to escalate further
Management stated opex would remain at current levels (but unlikely escalate further) within the near-term, given headcount requirements for the planned fleet expansion. While there is scope for slight moderation in repairs and maintenance costs (given newer trains), related savings will likely be offset by the impact of a larger fleet. Management hinted that near-term capex intensity could remain high, given the need for fleet (bus and taxi) replacement and refurbishment of mid life cycle trains.

There was no further clarity around capex allocation for the ongoing asset renewal programme. For reference, we currently forecast margin recovery in FY15, supported by moderating rate of opex increase.

Longer-term growth strategy – three key areas identified
Management highlighted SMRT’s involvement in the Sports Hub (opening 2014) as a platform from which similar opportunities could be pursued going forward. There were also plans to deepen and expand the company’s rail engineering capabilities, subject to market opportunities.

Finally, management stated they were starting to think about overseas expansion in a “more deliberate way”. Based on our interpretation of management’s comments, we think any overseas venture could potentially be in the area of rail operations and maintenance and/or retail management.

No details around timeline were offered, but we believe overseas expansion could feature more prominently in SMRT’s growth plan within the next 1-2 years.


Source/Extract/Excerpts/来源/转贴/摘录: DB-Research,
Publish date: 21/11/13

No comments:

Post a Comment

Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
  • Selected Indexes 52 week range

  • Margin of Safety

    Investment Clock

    World's First Interactive Investment Clock