Tuesday, November 5, 2013

SMRT : Yet to see light (DBSV)

SMRT
FULLY VALUED S$1.30
STI: 3,210.67
Price Target: 12-month S$1.08 (Prev S$1.20)
Yet to see light

• 2Q14 results below expectations, net profit slumped by 56% y-o-y/ 12% q-o-q to S$14.4m
• Fare revenue segments continue to register EBIT losses, offset by non-fare segments
• 1H14 DPS of just 1 Sct (1H13: 1.5 Scts)
• Cut earnings by 25%-28% to factor in higher operating costs. Maintain Fully Valued, TP lowered to S$1.08


Not seeing light yet. 2Q14 net profit registered a -57% y-oy and 12% q-o-q drop from 2Q13 and 1Q14 respectively, to S$14.4m. This was despite higher revenue of S$296.3m, which was 5.3%/4% higher compared to 2Q13/1Q14. EBIT margins slumped by 7.6ppts to 6.8% due to higher operating costs, which surged by 15.8% y-o-y to S$285.8m. This was largely contributed by higher staff costs (+27%), depreciation (+10.7%) and repair and maintenance (+14.2%).

Fare revenue segments continue to be under pressure. Overall, fare revenue segments (Train, LRT, Bus) registered an EBIT loss of S$6.5m, a sharp reversal from a profit of S$17.5m a year ago. The Group’s overall EBIT was fortunately supported by positive contribution from its non-fare revenue segments, which recorded a10.9% growth in EBIT to S$25.8m in 2Q14.

Maintain FV, trim TP to S$1.08 and forecasts by 28%/25%. We cut our FY14F/15F forecasts by 28%/25%, largely on the back of a higher staff costs, and higher repair and maintenance costs. Our TP is also trimmed to S$1.08 (from S$1.20), based on the average of 16x FY14F/15F (roll over from FY14F) and DCF (WACC: 5.4%, t=1%). We maintain our cautious stance on this counter and do not see turnaround in operations as yet. In addition, on the back of its continued capex needs, we now expect a lower dividend of just 2 Scts for FY14F, down 20% from a year ago (FY13: 2.5 Scts). Maintain Fully Valued.




Source/Extract/Excerpts/来源/转贴/摘录: DBSV-Research,
Publish date: 01/11/13

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