Market Pulse: SMRT (17 Dec 2009)

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SMRT Corporation Ltd: Riding high

Summary: As the operator of the Circle Line, we expect SMRT to capture higher train ridership as remaining stages of the line are progressively opened for operations from 2010 onwards. We believe a rising population and key events such as the opening of the Integrated Resorts would continue to drive SMRT’s transport services. For non-fare revenue, we are also optimistic that SMRT would likely turn in higher rental revenue amid larger lettable rental space from new refurbishments. We continue to like SMRT its defensive nature, consistently strong dividend payouts and operating cash flows. In view of market’s reduced risk aversion, we now raise our DDM-based fair value to S$2.05 from S$1.92 previously. While operating expenses are likely to trend upwards with the ramp-up in the CCL and higher electricity contract rates, we expect SMRT to uphold its profitability amid higher expected ridership and rental revenue. Maintain BUY. (Kevin Tan)

I hope we will go fullly into electric cars one day. Just a small electric car will do from pt A to B. I think this way, might not need train any more. LOL.