Transport Sector Land Transport Review

Land Transport Review. Over the last 2 weeks and over three speeches, Mr.
Raymond Lim, Minister for Transport and second Minister for Foreign
Affairs, reviewed Singapore's Land transport development over the last 10
years and also outlined a new roadmap for the next 10 to 15 years.

The main aim is to increase public transport usage. In a nutshell, the
Government aims to increase and promote public transport usage to ease
congestion to support future growth, by a) improving the quantity and
quality of bus services available to the public, b) improving the standards
and doubling of the rail network by 2020 and last but not least, c)
ensuring smooth flowing roads by adjusting ERP rate structures and lowering
vehicle growth rates.

This should benefit land transport operators in the long-term. Whilst the
new roadmap also involves the potential introduction of new operators, we
are of the view that the current incumbents, given their high level of
efficiency and scale, should continue to dominate their existing spheres of
influence for some time to come. In the long run, higher public transport
usage should be positive for both although immediate impact from this piece
of news is immaterial. We prefer ComfortDelgro (BUY, TP S$2.33) over SMRT
(HOLD, TP S$1.78), as the former offers a more attractive yield at 6.1%.