Story: 3Q08 results were within expectations as SMRT's bottom line fell by
5.3% to S$38.3m even as operating revenue rose by 7.3% yoy to S$202m. YTD,
9M08 earnings were up by 17% yoy to S$115.8m on top line growth of 6.7% to
S$594m.
Point: We remain sanguine about SMRT's prospects, as it continues to
benefit from Singapore's strong economy. Ridership should continue to
increase modestly whilst fares remain relatively stable and we believe that
the Group can register high single digit earnings growth over the next few
years.
Relevance: We maintain our HOLD call for SMRT as we believe it is fairly
valued, offering a prospective yield of less than 5%. Our S$1.78 target
price is based on target 4.5% net yield for FY09.
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