3 November 2014
SMRT Corp Ltd
Do not be fooled: Accounting profit and free
cash flow are not one and the same
SINGAPORE | TRANSPORT SERVICES | COMPANY UPDATE






2QFY15 Revenue increased 6.0%y-y to S$314.0mn, out-paced by 66.5%y-y
growth in EBIT to S$33.3mn and 75.5%y-y growth in PATMI to S$25.3mn.
Fare business made a commendable come-back to profitability at the
operating level to S$5.5mn, following 6 consecutive quarters of losses.
Non-fare business EBIT continued to grow at a moderate 4.1%y-y to
S$27.2mn.
Despite the apparent reversal of fortune, SMRT still does not generate a
positive free cash flow; net gearing to rise considerably in the next quarter.
1.50 Cents dividend declared (2QFY14: 1.00 Cents).
Maintain at "Reduce" rating, with lower TP of $1.370. (Previous S$1.470)
What is the news?
SMRT announced its 2QFY15 financial results on 31 October after market hours,
followed by the briefing for analysts and media. SMRT reported a 75.5%y-y
increase in PATMI to S$25.3 million, on the back of single digit 6.0%y-y Revenue
growth. Improved performance for SMRT was primarily due to Fare business
reversal to profitability.
How do we view this
 Largely in line with our estimates for individual line items. But variances
added up and we missed at the EBIT level. Management deserves credit for
the commendable effort in reining in costs and turning the Rail business to
profitability as well as lowering the loss for the Bus business.
 Derails swift transition to new Rail Financing Framework (RFF). With the
MRT business now registering a profit, it will become increasingly unpalatable
for the electorate on why the Government needs to help a profitable business
transition to the RFF. Such a move would likely raise the ire of the electorate
and we now place a higher probability on the transition not occurring before
the next General Elections.
 Still bleeding cash. Despite registering an accounting profit, SMRT is still
bleeding cash. Operating cash flow was not sufficient to cover Capex
requirements and we think that it will be the same again for 2HFY15.
FY15F
1,234
91
6.00
24.8
56.46
2.6
3.25
2.2%
FY16F
1,280
100
6.60
22.6
59.76
2.5
3.63
2.4%
0.38
Market Cap. (USD mn / SGD mn)
1765 / 2268
Ent. Value (USD mn / SGD mn)
2208 / 2832
3M Average Daily T/O (mn)
Closing Px in 52 wk range
0.96
1.01
1.66
1.80
40
35
30
25
20
15
10
5
0
1.60
1.40
1.20
1.00
0.80
Volume, mn
MRT SP Equity
Major Shareholders
1. Tema s ek Hol di ngs Pte Ltd
2. RCM Ca pi ta l Ma na gement LLC
3. Va ngua rd Group Inc
Nov-14
FY14
1,164
62
4.07
26.4
52.69
2.0
2.20
2.0%
Raw Beta (Past 2yrs weekly data)
Aug-14
FY13
1,119
101
6.62
23.0
50.54
3.0
2.50
1.6%
Company Data
May-14
FY12
1,057
142
9.21
19.1
51.50
3.4
7.45
4.2%
Company Description
SMRT Corp Ltd (SMRT) i s a mul ti -moda l l a nd
tra ns port opera tor i n Si nga pore. SMRT
opera tes two Ma s s Ra pi d Tra ns i t (MRT) Li nes ,
the Buki t Pa nja ng Li ght Ra i l Tra ns i t (BPLRT)
s ys tem, bus es a nd ta xi s . A s i gni fi ca nt pa rt of
i ts profi ts come from i ts a nci l l a ry bus i nes s es
of Renta l & Adverti s i ng. SMRT a l s o ha s a
s ta ke i n Shenzhen Zona Tra ns porta ti on, a
l a nd tra ns port opera tor ba s ed i n Shenzhen.
Feb-14
Key Financial Summary
FYE Mar
Revenue (SGD mn)
NPAT, a dj. (SGD mn)
EPS, a dj. (S Cents )
P/E (X),a dj.
BVPS (S Cents )
P/B (X)
DPS (S Cents )
Di v. Yi el d (%)
Source: Bl oomberg, PSR es t.
(Maintained at "Reduce")
Target Price (SGD)
1.370
Forecast Dividend (SGD) 0.033
Closing Price (SGD)
1.490
Potential Upside
-8.1%
Nov-13
Investment Actions
We do not see any compelling investment merit in SMRT primarily due to (1) weak
cash flow, (2) higher probability of the transition to the RFF being delayed, (3) and
the S$2 billion in obligations up to 2019 as the RFF negotiations drag on. SMRT is
looking more like a speculative punt on the transition occurring sooner rather
than later. We maintain our "Reduce" rating on SMRT, and lower our TP to
S$1.370 on the basis of our belief that the RFF does not transition by FY16.
Reduce
Rating:
STI rebased
(%)
54.2
0.8
0.6
Valuation Method
DCF (WACC: 5.1%, Termi na l g: 1.0%)
Analyst
Richard Leow, CFTe
ri cha rdl eowwt@phi l l i p.com.s g
+65 6531 1735
*Forward multiples & yields based on current market price;
historical multiples & yields based on historical market price.
Page | 1
MCI (P) 046/11/2013
Ref. No.: SG2014_0170
SMRT Corp Ltd
3 November 2014
Results at a glance
(SGD mn)
MRT
LRT
Bus
Ta xi
Rental
Advertis i ng
Engi neeri ng Servi ces
Revenue
EBITDA
Operating Profit/(Loss)
MRT
LRT
Bus
Ta xi
Rental
Advertis i ng
Engi neeri ng Servi ces
EBIT
PATMI
Source: Compa ny, PSR
2Q15
165.2
2.5
60.7
35.1
30.1
9.4
3.7
314.0
80.2
7.6
(0.7)
(1.4)
3.4
19.0
5.2
(0.9)
33.3
25.3
2Q14 y-y (%)
160.5
3.0
2.7
(8.5)
55.2
10.0
32.4
8.3
24.2
24.4
8.6
9.5
6.6
(43.9)
296.3
6.0
62.8
27.7
1.0
(0.4)
(7.4)
2.1
18.6
4.8
0.9
20.0
14.4
648.8
64.7
(80.6)
62.9
2.5
9.3
(197.5)
66.5
75.5
6M15
323.1
4.9
118.8
69.5
56.0
18.7
6.5
611.1
154.4
6M14 y-y (%) Comments
314.0
2.9
5.3
(7.4)
108.8
9.2
65.4
6.4 Hi gher rental i ncome from newer fl eet.
47.7
17.3
16.8
11.5 Increa s ed a dvertis i ng on tra i ns , s tations a nd taxi s .
10.3
(36.6)
581.1
5.2 Broad based growth across most segments.
124.9
23.6
12.6
3.9
(1.3) (1.0)
(7.0) (14.9)
7.5
4.3
39.1
36.3
10.8
9.5
(0.8)
1.5
62.6
42.2
47.6
30.8
224.4
29.8
(53.3)
74.1
7.8
13.7
Lower s taff cos ts ; l ower el ectri ci ty cos ts .
Productivi ty ga i ns .
Lower di es el tax a nd l ower i ns ura nce expens e.
Hi gher rental renewa l ra tes .
Expens es for newl y s et up Si nga pore Ra i l Engi neeri ng.
48.3 Hi gher Ra i l profi t, l ower Bus l os s es .
54.9
(156.9)
Discussion of 2QFY15 results
Key contributing factors: Higher Rail profit and lower Bus losses.
 EBIT improved by S$13.3 million y-y.
 Key contributing factors to the y-y improvement was the higher Rail profit
(increased by S$6.6 million) and the lower Bus operating loss (reduced by S$6.0
million).
Higher Rail profit due to managing Staff costs and Fuel costs well.
 Staff cost being the largest cost component (39.5% of total operating costs)
was controlled well through productivity gains and saw a 1.1%y-y decline.
 Notable cost reduction was seen through the fuel cost component (16.5% of
total operating costs), dropping a significant 14.4%y-y, which came as a positive
surprise.
Lower Bus losses through overall cost controlled.
 Individual cost components for Bus business were mixed, but overall grew a
moderate 4.3%y-y.
 However, the higher Revenue which grew 10%y-y helped to offset the increase
in operating costs thus lowering the operating loss.
Review of our 2QFY15 estimates
 Our 2QFY15 estimates for revenue, other operating income and total expenses
were in line with actual results, but the variances added up and we missed at
the EBIT level.
 Revenue: S$311.2m est., S$314.0m actual.
 Other operating income: S$11.3m est., S$12.2m actual.
 Total operating expenses: S$296.2m est., S$292.9 actual.
 EBIT: S$26.3m est., S$33.3 actual.
Adjustments made to our forecasts. We make adjustments to the cost components
in our forecasts to account for: (1) prevailing change in fuel costs and (2) evidence
of cost savings through productivity gains. (3) We also raised our forward Capex
estimates to account for the increased probability of SMRT having to make good on
at least some of its S$2 billion obligations related to the NSEWL.
SMRT's 6MFY15 Revenue, EBIT and PATMI now stand at 49.5%, 51.2% and 52.1%
respectively of our full year FY15F estimates.
Page | 2
SMRT Corp Ltd
3 November 2014
Items discussed at the analyst and media briefing
Taxi business
 Following a survey of potential third party apps, SMRT had chosen to partner
with Hailo as it was deemed the most appealing (favourable user experience)
to both the commuter and taxi hirer.
 SMRT did not see any discernable trend in their call centre bookings and it
"continues to be active".
 However, it noted a trend of more passengers turning to third-party apps.
 In terms of taxi fleet, it is of varying ages and there is a drive to use a common
fleet.
Loss making LRT business
 SMRT will not abandon or divest this business, as it has a licenced obligation to
discharge their duty to provide the service until 2028.
 SMRT has no intention of rescinding the licence agreement and will balance
costs with the prevailing fare regime.
Not provisioning for fines
 Effort will be channelled more productively to focus on improving service
standards.
Rental business
 Healthy contributions from Sports Hub operations, and higher rental renewal
rates from within the network.
Capex guidance
 Management did not quote a specific number for Capex for FY15, but guided
that "it remains unchanged from the previous briefing". (i.e. S$600 million)
 No guidance was given for FY16F, but would be given at the end of FY15.
Page | 3
SMRT Corp Ltd
3 November 2014
Accounting profit is not the same as cash flow!
While SMRT did a commendable job with the 75.5%y-y increase in PATMI, but we
still highlight to investors that accounting profit and actual free cash flow are not
the same thing. We argue that despite showing an accounting profit, SMRT is still
not able to generate a positive free cash flow!
Use of S$100 million borrowings.
Closer examination of SMRT's Consolidated Statement of Cash Flows reveals that
2QFY15 Cash flow from operating activities of S$129.0 million was not able to cover
the net Capital Expenditure of (S$153.9 million). On a 6M-YTD basis, 6MFY15 Cash
flow from operating activities of S$163.9 million did not cover the net Capital
Expenditure of (S$247.8 million). This implies a 6M-YTD short fall of $83.9 million.
In 1QFY15, SMRT had raised S$100 million debt (through the MTN program and
issued on 11 June 2014), which was in effect, substantially used to top up the
shortfall of Cash flow from operating activities to support its Capex obligations
during 1HFY15.
Where are the dividends coming from?
With the 1.5 Cents dividend declared, SMRT will be paying out about S$22.8 million
cash dividend in the next quarter. We think that investors should be made aware
that their dividends are not from coming from free cash flow generated over the
normal course of business during the period, because there is none to begin with!
Coincidentally, the S$83.9 million short fall for 1HFY15 Capex and the S$22.8 million
dividend add up to just over S$100 million.
Capex going forward for 2HFY15.
6MFY15 Capex stands at close to S$248 million, implying about another S$352
million to go for 2HFY15 (based on Management guidance of S$600 million Capex
for FY15).
Additional S$200 million debt raised and net gearing to rise in next quarter.
We draw investors' attention to the additional S$200 million debt that has been
raised and announced on 16 October 2014. This additional S$200 million debt is not
reflected in 2QFY15 balance sheet as it had occurred after the reporting period of
September. Consequently, SMRT's net gearing would be considerably much higher
in 3QFY15 than the 68% as reported on 2QFY15 balance sheet. Net gearing could be
as high as 92% in the next quarter, by our estimates, assuming all other things being
equal and the S$200 million is used up.
S$300 million debt raised so far in 1HFY15.
We had already been forecasting since our first re-initiation report (29 April 2014)
that SMRT would need to raise S$300 million debt to support their FY15 cash flow.
We think that it had been obvious that structurally, the business model is not
sustainable and requires constant injection of funds to support its voracious Capex
appetite.
High gearing limits inorganic growth.
SMRT lacks the internal funds to make strategic acquisitions, and the highly
leveraged balance sheet is inhibitive to raising new debt for acquisitions.
Page | 4
SMRT Corp Ltd
3 November 2014
What do we think of the transition to the new RFF?
The biggest re-rating catalyst for SMRT now is the transition to the new RFF. While
we think that transition to the RFF is a given and likely to be overall positive for
SMRT, but the key uncertainty is: "When will it happen?"
SMRT's cash flow to materially improve
With the responsibility of Capex renewal lifted off SMRT's shoulders under the RFF,
free cash flow for SMRT should materially improve. Hence the transition to the new
RFF should affect SMRT's share price positively.
But still bleeding cash now
However, until the transition to the RFF materialises, SMRT will still be bleeding
cash. SMRT's cash flow from operating activities in FY14 was insufficient to cover its
net Capex, and the situation remains the same for 1HFY15.
We think that SMRT will see a modest reprieve in FY17F onwards, owing to the
change in bus model in Singapore to the Government Contracting Model (GCM).
Under the asset-light GCM, the Government will own all operating assets and be
responsible for asset renewal. Hence SMRT will no longer be required to purchase
new buses.
Timing of implementation remains uncertain
Our position remains unchanged from our Singapore Land Transport Sector report
(21 August 2014), in that "Shareholders of SMRT could be in for a bumpy ride if
negotiations between LTA and SMRT are protracted and such a transition to the RFF
is delayed". We also said that "LTA is not obligated to revise the framework since
SMRT's licence remains valid for 30 years until 2028." This is consistent with what
was discussed during the analyst briefing about SMRT having to continue the loss
making LRT business until 2028.
Now that the Rail business is registering a profit, it will be increasingly difficult to
convince the electorate and general public at large that SMRT needs to transition to
the sustainable RFF model. We think that this has raised the probability of the
transition to not occur before the next General Elections.
In a nutshell: Will there be price upside in the future? Yes, but…
With the weak cash flow of SMRT and hampered ability for inorganic growth, we do
not see any compelling investment merit in it, other than being a speculative punt
that the transition to the new Rail Financing Framework occurs sooner rather than
later.
Page | 5
SMRT Corp Ltd
3 November 2014
Quarterly Revenue and Profitability data
Fig 1. Revenue (S$ mn)
Fig 2. Revenue by Fare/Non-Fare Business (S$ mn)
Revenue
350
300
250
200
150
100
50
0
%y-y, RHS
Source: Company, PSR
15%
10%
5%
0%
350
300
250
200
150
100
50
0
Fare
Fare %y-y, RHS
10%
5%
0%
Source: Company, PSR
-5%
2Q15
1Q15
4Q14
3Q14
LRT
2Q14
MRT
1Q14
4Q13
3Q13
2Q13
1Q13
4Q12
Remarks: Higher y-y growth for Non-Fare revenue than Fare revenue.
Fig 3. Revenue by Business (S$ mn)
180
160
140
120
100
80
60
40
20
0
Non-Fare %y-y, RHS
20%
15%
3Q12
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
1Q13
4Q12
3Q12
Remarks: Revenue grew 6.0%y-y.
Non-Fare
Bus
Revenue Segmentation for YTD 6M15
Taxi
Rental
Advertising
Source: Company, PSR
Engineering Services
9%
3% 1%
12%
20%
54%
1%
3Q12
4Q12
1Q13
2Q13
3Q13
Remarks: Highest source of revenue from MRT fares.
4Q13
1Q14
Fig 4. Operating profit (S$ mn)
2Q14
3Q14
4Q14
1Q15
2Q15
Fig 5. Operating profit by Fare/Non-Fare Business (S$ mn)
Operating profit
%y-y, RHS
Fare
Fare %y-y, RHS
Non-Fare
Non-Fare %y-y, RHS
Source: Company,150%
PSR
60
40
100%
40
0%
30
50%
20
-100%
20
0%
10
-50%
50
0
100%
0
-200%
Source: Company, PSR
-100% -20
-300%
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
1Q13
4Q12
3Q12
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
1Q13
4Q12
3Q12
Remarks: 2Q15 EBIT grew 66.5%y-y.
Remarks: Fare business reversed to profitability.
Fig 6. Operating profit by Business (S$ mn)
MRT
30
25
20
15
10
5
0
-5
-10
-15
3Q12
4Q12
LRT
Bus
1Q13
Fig 7. PATMI, adj. (S$ mn)
PATMI, adj.
40
Taxi
2Q13
Rental
3Q13
Advertising
4Q13
Engineering Services
1Q14
2Q14
Source: Company, PSR
3Q14
4Q14
1Q15
2Q15
Fig 8. Earnings per share, adj. (S Cents)
%y-y, RHS
Source: Company, PSR 250%
200%
150%
100%
50%
0%
-50%
30
20
10
3.0
EPS, adj.
250%
Source: Company, PSR
200%
%y-y, RHS
2.5
150%
2.0
100%
1.5
50%
1.0
0%
0.5
-50%
-100% 0.0
0
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
1Q13
4Q12
3Q12
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
1Q13
4Q12
3Q12
Remarks: 2Q15 PATMI grew 75.5%y-y.
-100%
Remarks: 2Q15 1.70 S Cents EPS.
Page | 6
SMRT Corp Ltd
3 November 2014
Quarterly Financial Indicators
Fig 9. EBITDA, EBIT & Net margins
35%
EBITDA margin
EBIT margin
Net margin
Source: Company, PSR
30%
25%
20%
15%
10%
5%
0%
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
Fig 10. Operating Margin by Business
MRT
100%
6M14
6M15
y-y comparison for YTD 6M15
LRT
Bus
Taxi
2Q13
3Q13
Rental
Advertising
Engineering Services
Source: Company, PSR
80%
60%
40%
20%
0%
-20%
-40%
3Q12
4Q12
1Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
6M14
6M15
Remarks: (1) Rental and Advertising have the highest operating Margins. (2) LRT, Bus and Engineering Services are loss-making.
YTD 6M15 performance with Historical performance
Fig 11. Revenue (S$ mn)
1,400
Revenue
Fig 12. Operating profit (S$ mn)
6M14
6M15
Source: Company, PSR est.
1,200
250
Operating Profit
6M14
6M15
Source: Company, PSR est.
200
1,000
800
150
600
100
400
50
200
0
0
FY11
FY12
FY13
FY14
FY15F
Remarks: 6M15 Revenue 49.5% of FY15F.
FY11
FY12
FY13
FY14
FY15F
Remarks: 6M15 EBIT 51.2% of FY15F.
Fig 13. PATMI, adj. (S$ mn)
200
PATMI
6M14
6M15
Source: Company, PSR est.
150
100
50
0
FY11
FY12
FY13
FY14
FY15F
Remarks: 6M15 PATMI, adj. 52.1% of FY15F.
Page | 7
SMRT Corp Ltd
3 November 2014
FYE Mar
Income Statement (SGD mn)
Revenue
Other opera ti ng i ncome
EBITDA
Depreci a ti on & Amorti s a ti on
EBIT
Net Fi na nce (Expens e)/Inc
Other i tems
As s oci a tes & JVs
Excepti ona l i tems
Profit Before Tax
Ta xa ti on
Profit After Tax
- Non-control l i ng i nteres t
Net Income, reported
Net Income, adj.
FYE Mar
Per share data (S Cents)
EPS, reported
EPS, a dj.
DPS
BVPS
FYE Mar
Cashflow Statements (SGD mn)
CFO
PBT
Adjus tments
WC cha nges
Ca s h genera ted from ops
Others
Cashflow from ops
CFI
CAPEX, net
Di vd from a s s oci a tes & JVs
Others
Cashflow from investments
CFF
Sha re i s s ua nce, net
Loa ns , net of repa yments
Di vi dends
Others
Cashflow from financing
Net change in cash
Effects of excha nge ra tes
CCE, end
Source: Compa ny Da ta , PSR es t
FY12
FY13
FY14 FY15F FY16F
1,057 1,119 1,164 1,234 1,280
22
36
42
49
51
300
278
256
311
323
(130) (151) (171) (189) (190)
170
127
84
122
133
(4.5) (4.8) (9.2) (15.0) (14.9)
2.7
(0.4) (0.4)
2.6
2.8
(22)
(17)
147
105
75
110
121
(27)
(22)
(13)
(19)
(21)
120
83
61
91
100
(0.1) (0.4) (0.6) (0.7)
120
83
62
91
100
142
101
62
91
100
FY12
7.80
9.21
7.45
51.50
FY12
FY13
5.50
6.62
2.50
50.54
FY13
FY14 FY15F FY16F
4.07
4.07
2.20
52.69
6.00
6.00
3.25
56.46
6.60
6.60
3.63
59.76
FY12
1,346
14
68
15
1,443
54
64
195
0.0
313
1,756
546
58
604
150
210
360
965
791
FY13
1,436
14
51
32
1,532
60
86
546
692
2,224
2
577
54
633
607
216
823
1,456
0.3
768
FY14 FY15F FY16F
1,642
14
53
21
1,729
84
99
5.0
156
344
2,073
156
355
54
566
480
225
705
1,271
(0.1)
802
1,973
14
55
21
2,063
89
105
5.0
197
396
2,459
156
377
72
605
780
215
995
1,600
(0.7)
860
2,184
14
58
21
2,276
93
109
5.0
48
254
2,531
156
391
90
637
780
204
984
1,621
(1.4)
911
FY14 FY15F FY16F
147
105
75
175
193
187
10.5 (18.9) (12.8)
332
279
249
(50)
(19)
(15)
282
260
234
110
204
10.4
325
(35)
290
121
205
6.8
333
(37)
296
(234) (248)
0.2
0.2
(0.0) (14.4)
(234) (262)
(649)
0.2
6.5
(643)
(531)
0.4
(531)
(412)
0.5
(411)
0.41
(100)
(129)
0.1
(229)
(181)
(0.0)
195
0.05
29
(30)
18.9
17
(391)
0.2
156
300
(33)
15.2
282
41
197
(49)
15.2
(34)
(149)
48
0.57
460
(109)
2.5
353
351
(0.1)
546
FYE Mar
Balance Sheet (SGD mn)
PPE
Inta ngi bl es
As s oci a tes & JVs
Inves tments
Others
Total non-current assets
Inventori es
Accounts Recei va bl es
Inves tments
Ca s h
Others
Total current assets
Total Assets
Short term l oa ns
Accounts Pa ya bl es
Others
Total current liabilities
Long term l oa ns
Others
Total non-current liabilities
Total Liabilities
Non-control l i ng i nteres t
Shareholder Equity
FYE Mar
Valuation Ratios
P/E (X), a dj.
P/B (X)
EV/EBITDA (X), a dj.
Di vi dend Yi el d (%)
Growth & Margins (%)
Growth
Revenue
EBITDA
EBIT
Net Income, a dj.
Margins
EBITDA ma rgi n
EBIT ma rgi n
Net Profi t Ma rgi n
Key Ratios
ROE (%)
ROA (%)
Net Debt/(Ca s h)
Net Gea ri ng (X)
FY12
FY13
FY14 FY15F FY16F
19.1
3.4
8.9
4.2%
23.0
3.0
8.5
1.6%
26.4
2.0
8.3
2.0%
24.8
2.6
9.7
2.2%
22.6
2.5
9.8
2.4%
9.0% 5.9% 4.0% 6.0%
-4.7% -7.3% -8.1% 21.9%
-12.9% -25.1% -33.9% 45.3%
-12.1% -28.9% -38.5% 47.6%
3.7%
3.7%
8.7%
9.9%
28.4% 24.8% 22.0% 25.2% 25.2%
16.1% 11.4% 7.2% 9.9% 10.4%
11.3% 7.4% 5.3% 7.4% 7.8%
17.8% 12.9%
8.4% 5.1%
(45)
Net Cash
63
0.08
7.9% 11.0% 11.3%
2.9% 4.0% 4.0%
481
0.60
740
0.86
889
0.98
*Forward multiples & yields based on current market price; historical multiples & yields based on historical market price.
Page | 8
SMRT Corp Ltd
3 November 2014
Ratings History
2.00
Source: Bl oomberg, PSR
Market Price
Target Price
1.80
1.60
1.40
1.20
1.00
0.80
Jun-15
Mar-15
Dec-14
Sep-14
Jun-14
Mar-14
Dec-13
Sep-13
Jun-13
Mar-13
Dec-12
Sep-12
Jun-12
1
2
3
4
5
PSR Rating System
Total Returns
Recommendation Rating
> +20%
Buy
1
+5% to +20%
Accumul a te
2
-5% to +5%
Neutra l
3
-5% to -20%
Reduce
4
< -20%
Sel l
5
Remarks
We do not ba s e our recommenda tions entirel y on the a bove qua ntitative
return ba nds . We cons i der qua l i tative fa ctors l i ke (but not l i mi ted to) a s tock's
ri s k rewa rd profi l e, ma rket s entiment, recent ra te of s ha re pri ce a ppreci a tion,
pres ence or a bs ence of s tock pri ce ca tal ys ts , a nd s pecul a tive undertones
s urroundi ng the s tock, before ma ki ng our fi na l recommenda tion
Page | 9
SMRT Corp Ltd
3 November 2014
Important Information
This publication is prepared by Phillip Securities Research Pte Ltd., 250 North Bridge Road, #06-00, Raffles City Tower, Singapore 179101 (Registration Number:
198803136N), which is regulated by the Monetary Authority of Singapore (“Phillip Securities Research”). By receiving or reading this publication, you agree to be
bound by the terms and limitations set out below. This publication has been provided to you for personal use only and shall not be reproduced, distributed or
published by you in whole or in part, for any purpose. If you have received this document by mistake, please delete or destroy it, and notify the sender
immediately. Phillip Securities Research shall not be liable for any direct or consequential loss arising from any use of material contained in this publication.
The information contained in this publication has been obtained from public sources, which Phillip Securities Research has no reason to believe are unreliable
and any analysis, forecasts, projections, expectations and opinions (collectively, the “Research”) contained in this publication are based on such information and
are expressions of belief of the individual author or the indicated source (as applicable) only. Phillip Securities Research has not verified this information and no
representation or warranty, express or implied, is made that such information or Research is accurate, complete, appropriate or verified or should be relied
upon as such. Any such information or Research contained in this publication is subject to change, and Phillip Securities Research shall not have any
responsibility to maintain or update the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no
event will Phillip Securities Research or persons associated with or connected to Phillip Securities Research, including but not limited its officers, directors,
employees or persons involved in the preparation or issuance of this report, (i) be liable in any manner whatsoever for any consequences (including but not
limited to any special, direct, indirect, incidental or consequential losses, loss of profits and damages) of any reliance or usage of this publication or (ii) accept
any legal responsibility from any person who receives this publication, even if it has been advised of the possibility of such damages. You must make the final
investment decision and accept all responsibility for your investment decision, including, but not limited to your reliance on the information, data and/or other
materials presented in this publication.
Any opinions, forecasts, assumptions, estimates, valuations and prices contained in this material are as of the date indicated and are subject to change at any
time without prior notice. Past performance of any product referred to in this publication is not indicative of future results.
This report does not constitute, and should not be used as a substitute for, tax, legal or investment advice. This publication should not be relied upon exclusively
or as authoritative, without further being subject to the recipient’s own independent verification and exercise of judgment. The fact that this publication has
been made available constitutes neither a recommendation to enter into a particular transaction, nor a representation that any product described in this
material is suitable or appropriate for the recipient. Recipients should be aware that many of the products, which may be described in this publication involve
significant risks and may not be suitable for all investors, and that any decision to enter into transactions involving such products should not be made, unless all
such risks are understood and an independent determination has been made that such transactions would be appropriate. Any discussion of the risks contained
herein with respect to any product should not be considered to be a disclosure of all risks or a complete discussion of such risks. Nothing in this report shall be
construed to be an offer or solicitation for the purchase or sale of any product. Any decision to purchase any product mentioned in this research should take into
account existing public information, including any registered prospectus in respect of such product.
Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees
or persons involved in the preparation or issuance of this report, may provide an array of financial services to a large number of corporations in Singapore and
worldwide, including but not limited to commercial / investment banking activities (including sponsorship, financial advisory or underwriting activities),
brokerage or securities trading activities. Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not
limited to its officers, directors, employees or persons involved in the preparation or issuance of this report, may have participated in or invested in transactions
with the issuer(s) of the securities mentioned in this publication, and may have performed services for or solicited business from such issuers. Additionally,
Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees
or persons involved in the preparation or issuance of this report, may have provided advice or investment services to such companies and investments or related
investments, as may be mentioned in this publication.
Phillip Securities Research or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or
persons involved in the preparation or issuance of this report may, from time to time maintain a long or short position in securities referred to herein, or in
related futures or options, purchase or sell, make a market in, or engage in any other transaction involving such securities, and earn brokerage or other
compensation in respect of the foregoing. Investments will be denominated in various currencies including US dollars and Euro and thus will be subject to any
fluctuation in exchange rates between US dollars and Euro or foreign currencies and the currency of your own jurisdiction. Such fluctuations may have an
adverse effect on the value, price or income return of the investment.
To the extent permitted by law, Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its
officers, directors, employees or persons involved in the preparation or issuance of this report, may at any time engage in any of the above activities as set out
above or otherwise hold a interest, whether material or not, in respect of companies and investments or related investments, which may be mentioned in this
publication. Accordingly, information may be available to Phillip Securities Research, or persons associated with or connected to Phillip Securities Research,
including but not limited to its officers, directors, employees or persons involved in the preparation or issuance of this report, which is not reflected in this
material, and Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors,
employees or persons involved in the preparation or issuance of this report, may, to the extent permitted by law, have acted upon or used the information prior
to or immediately following its publication. Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not
limited its officers, directors, employees or persons involved in the preparation or issuance of this report, may have issued other material that is inconsistent
with, or reach different conclusions from, the contents of this material.
The information, tools and material presented herein are not directed, intended for distribution to or use by, any person or entity in any jurisdiction or country
where such distribution, publication, availability or use would be contrary to the applicable law or regulation or which would subject Phillip Securities Research
to any registration or licensing or other requirement, or penalty for contravention of such requirements within such jurisdiction. Section 27 of the Financial
Advisers Act (Cap. 110) of Singapore and the MAS Notice on Recommendations on Investment Products (FAA-N01) do not apply in respect of this publication.
This material is intended for general circulation only and does not take into account the specific investment objectives, financial situation or particular needs of
any particular person. The products mentioned in this material may not be suitable for all investors and a person receiving or reading this material should seek
advice from a professional and financial adviser regarding the legal, business, financial, tax and other aspects including the suitability of such products, taking
into account the specific investment objectives, financial situation or particular needs of that person, before making a commitment to invest in any of such
products.
Please contact Phillip Securities Research at [65 65311240] in respect of any matters arising from, or in connection with, this document.
This report is only for the purpose of distribution in Singapore.
Page | 10
SMRT Corp Ltd
3 November 2014
Contact Information (Singapore Research Team)
Management
Chan Wai Chee
(CEO, Research - Special Opportunities)
Joshua Tan
(Head, Research - Equities & Macro)
Macro | Equities
Soh Lin Sin
Bakhteyar Osama
+65 6531 1516
+65 6531 1793
Research Operations Officer
Jaelyn Chin
+65 6531 1240
+65 6531 1231
+65 6531 1249
Market Analyst | Equities
Kenneth Koh
+65 6531 1791
Finance | Offshore Marine
Benjamin Ong
+65 6531 1535
Real Estate
Caroline Tay
Telecoms | Technology
Colin Tan
Transport & Logistics
Richard Leow, CFTe
+65 6531 1735
Contact Information (Regional Member Companies)
MALAYSIA
Phillip Capital Management Sdn Bhd
B-3-6 Block B Level 3 Megan Avenue II,
No. 12, Jalan Yap Kwan Seng, 50450
Kuala Lumpur
Tel +603 2162 8841
Fax +603 2166 5099
Website: www.poems.com.my
+65 6531 1221
SINGAPORE
Phillip Securities Pte Ltd
Raffles City Tower
250, North Bridge Road #06-00
Singapore 179101
Tel +65 6533 6001
Fax +65 6535 6631
Website: www.poems.com.sg
US Equities
Wong Yong Kai
+65 6531 1685
+65 6531 1792
HONG KONG
Phillip Securities (HK) Ltd
11/F United Centre 95 Queensway
Hong Kong
Tel +852 2277 6600
Fax +852 2868 5307
Websites: www.phillip.com.hk
JAPAN
Phillip Securities Japan, Ltd.
4-2 Nihonbashi Kabuto-cho Chuo-ku,
Tokyo 103-0026
Tel +81-3 3666 2101
Fax +81-3 3666 6090
Website: www.phillip.co.jp
INDONESIA
PT Phillip Securities Indonesia
ANZ Tower Level 23B,
Jl Jend Sudirman Kav 33A
Jakarta 10220 – Indonesia
Tel +62-21 5790 0800
Fax +62-21 5790 0809
Website: www.phillip.co.id
CHINA
Phillip Financial Advisory (Shanghai) Co Ltd
No 550 Yan An East Road,
Ocean Tower Unit 2318,
Postal code 200001
Tel +86-21 5169 9200
Fax +86-21 6351 2940
Website: www.phillip.com.cn
THAILAND
Phillip Securities (Thailand) Public Co. Ltd
15th Floor, Vorawat Building,
849 Silom Road, Silom, Bangrak,
Bangkok 10500 Thailand
Tel +66-2 6351700 / 22680999
Fax +66-2 22680921
Website www.phillip.co.th
FRANCE
King & Shaxson Capital Limited
3rd Floor, 35 Rue de la Bienfaisance 75008
Paris France
Tel +33-1 45633100
Fax +33-1 45636017
Website: www.kingandshaxson.com
UNITED KINGDOM
King & Shaxson Capital Limited
6th Floor, Candlewick House,
120 Cannon Street,
London, EC4N 6AS
Tel +44-20 7426 5950
Fax +44-20 7626 1757
Website: www.kingandshaxson.com
UNITED STATES
Phillip Futures Inc
141 W Jackson Blvd Ste 3050
The Chicago Board of Trade Building
Chicago, IL 60604 USA
Tel +1-312 356 9000
Fax +1-312 356 9005
Website: www.phillipusa.com
AUSTRALIA
Phillip Capital Limited
Level 12, 15 William Street,
Melbourne, Victoria 3000, Australia
Tel +61-03 9629 8288
Fax +61-03 9629 8882
Website: www.phillipcapital.com.au
SRI LANKA
Asha Phillip Securities Limited
No-10 Prince Alfred Tower,
Alfred House Gardens,
Colombo 03, Sri Lanka
Tel: (94) 11 2429 100
Fax: (94) 11 2429 199
Website: www.ashaphillip.net
TURKEY
PhillipCapital Menkul Degerler
Dr. Cemil Bengü Cad. Hak Is Merkezi
No. 2 Kat. 6A Caglayan
34403 Istanbul, Turkey
Tel: 0212 296 84 84
Fax: 0212 233 69 29
Website: www.phillipcapital.com.tr
DUBAI
Phillip Futures DMCC
Member of the Dubai Gold and
Commodities Exchange (DGCX)
Unit No 601, Plot No 58, White Crown Bldg,
Sheikh Zayed Road, P.O.Box 212291
Dubai-UAE
Tel: +971-4-3325052 / Fax: + 971-4-3328895
Website: www.phillipcapital.in
INDIA
PhillipCapital (India) Private Limited
No.1, 18th Floor
Urmi Estate
95, Ganpatrao Kadam Marg
Lower Parel West, Mumbai 400-013
Maharashtra, India
Tel: +91-22-2300 2999 / Fax: +91-22-2300 2969
Website: www.phillipcapital.in
Page | 11