Stock Name: SMRT
Company Name: SMRT CORPORATION LTD
Company Name: SMRT CORPORATION LTD
| Research House: Kim Eng | Price Call: SELL | Target Price: 1.50 |
Kim Eng has downgraded Singapore’s biggest train operator SMRT Corp (SMRT.SI) to sell from hold and lowered its target price to $1.50 from $1.85, citing frequent operational hiccups and higher earnings risk.
Singapore suffered three major subway disruptions last week, each lasting several hours. Last Thursday, hundreds of commuters were trapped underground without light and ventilation for over an hour before they heard from SMRT.
Singapore suffered three major subway disruptions last week, each lasting several hours. Last Thursday, hundreds of commuters were trapped underground without light and ventilation for over an hour before they heard from SMRT.
Kim Eng said it had lowered its earning per share forecasts for SMRT’s 2012-2014 fiscal years by 2-3% as repair and maintenance costs will likely increase.
Other one-off expenses that may be incurred include refunds and provision of free shuttle bus services to help affected passengers, as well as punitive fines by Singapore’s Land Transport Authority (LTA) of up to $1 million, Kim Eng said.
The LTA may also take into consideration the recent train disruptions, particularly service reliability, when awarding tenders in the future, Kim Eng added.
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