DBS has downgraded SMRT Holdings to “fully valued” from “hold” with $1.24 target price as it believes the market has “prematurely” priced in rail reforms.
“With the recent surge in share price, we believe the market may have been overly optimistic on the possible impact of the New Rail Financing Framework (NFF) for SMRT,” says Andy Sim in a Thursday report.
While the event should be a positive catalyst for SMRT when it happens, Sim believes there is limited upside at current share price.
Management has also indicated that rail-related maintenance expense as a percentage of rail revenue is projected to rise to 50% by end FY16F, up from 41% in 2Q16, on the back of its aging fleet and expanded network.
To recap, SMRT’s 2Q16 results came in within expectations, with net profit up by 2% y-o-y to $25.7 million.
Revenue grew by 4.7% to $328.8 million driven by higher fares and non-fare revenue contribution, namely rental, advertising and taxis.
SMRT is up 0.34% at $1.49.
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“With the recent surge in share price, we believe the market may have been overly optimistic on the possible impact of the New Rail Financing Framework (NFF) for SMRT,” says Andy Sim in a Thursday report.
While the event should be a positive catalyst for SMRT when it happens, Sim believes there is limited upside at current share price.
Management has also indicated that rail-related maintenance expense as a percentage of rail revenue is projected to rise to 50% by end FY16F, up from 41% in 2Q16, on the back of its aging fleet and expanded network.
To recap, SMRT’s 2Q16 results came in within expectations, with net profit up by 2% y-o-y to $25.7 million.
Revenue grew by 4.7% to $328.8 million driven by higher fares and non-fare revenue contribution, namely rental, advertising and taxis.
SMRT is up 0.34% at $1.49.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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