Land Transport - Implications Of SBS Transit Framework Agreement With LTA
- We are positive on SBS Transit (SGX:S61)’s latest framework arrangement with LTA regarding the Downtown Line (DTL) financing framework transition and extension of bus packages.
- While we estimate the P&L impact to be rather neutral, the deal improves the company’s earnings stability, and paves the way for a higher dividend payout ratio in FY22F.
- SBS Transit’s 3Q21 results were in line with our expectations, but ComfortDelGro (SGX:C52)’s came in slightly below.
- SBS Transit saw a slight sequential net profit improvement in 3Q21 to S$13.9m (+5% q-o-q,-28% y-o-y) due to higher service revenue from fuel-indexation and better performance in commercial services.
- ComfortDelGro’s 3Q21 core net profit of S$25.8m (-26% q-o-q, -34.0% y-o-y) was sequentially lower due to higher taxi rebates granted and negative impact on Australia’s charter bus business due to lockdowns.
- Maintain Overweight; we expect earnings recovery in FY22F with mobility recovery.
Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.
ONG Khang Chuen CFA CGS-CIMB Research | Darren ONG CGS-CIMB Research | https://www.cgs-cimb.com 2021-11-11 2021-11-11
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