20140117-Maybank_KERPL-Land_Transport_3.2__fare_hike_unveiled_11页_571kb

报告摘要

Fare Hike Announcement: The Public Transport Council (PTC) announced a 3.2% fare increase, effective from 6 April 2014. This is below the expected 5% revision and also below the full fare cap of 6.6% that was withheld in previous years.
Revenue Reallocation: To address losses in bus operations, the PTC adjusted the revenue allocation, shifting part of the revenue from rail to bus operations. This results in a SGD48.0m increase for bus operations and SGD5.5m for rail operations.
Net Benefits: SBS Transit (SBST) and SMRT are expected to receive net benefits of SGD28.8m and SGD13.2m respectively after accounting for one-off contributions to the Public Transport Fund (PTF).
One-off Contributions: The PTOs will contribute SGD11.5m to the PTF, with SMRT contributing SGD4.3m and SBST SGD7.2m.
Investment Thesis: The investment thesis on the sector remains unchanged, but the fare hike reinforces a negative view on SMRT. The net benefit is not sufficient to offset margin pressures, and SMRT faces additional threats from the opening of the Downtown Line Stage 2 in 2016, which could cannibalize 17% of its fare revenue.
ComfortDelGro: ComfortDelGro is considered a more insulated investment as its fare-based business constitutes less than 8% of its market value.

Fare Increase Impact: The 3.2% fare increase is less than expected, and the PTC has delayed the full fare cap increase to minimize impact on commuters.
Revenue Shift: A portion of the fare revenue will be reallocated from rail to bus operations, which will benefit SBST more than SMRT due to its larger bus operation.
Net Benefits:
- SBST: SGD28.8m
- SMRT: SGD13.2m
Financial Impact on SMRT:
- Net Income:
  - FY14E: SGD61.3m
  - FY15E: SGD76.6m
  - FY16E: SGD36.3m
- Target Price:
  - FY14E: SGD0.60
  - FY15E: SGD0.60
  - % Revision: -33% for TP
Financial Impact on ComfortDelGro:
- Net Income:
  - FY14E: SGD273.0m
  - FY15E: SGD293.8m
  - FY16E: SGD338.9m
- Target Price:
  - FY14E: SGD2.31
  - % Revision: -3% for TP
- Valuation: ComfortDelGro is valued at 18x FY14E P/E, while SMRT is valued at 14x FY14-16E P/E.

Fare Increase Details:
- Overall Fare Revenue Increase: SGD53.5m
- SBST Gross Revenue Gain: SGD36.0m
- SMRT Gross Revenue Gain: SGD17.5m
SMRT's Challenges:
- Margin Pressures: Persistent cost pressures and fare-based business challenges.
- Cannibalization Risk: Opening of Downtown Line Stage 2 in 2016 may reduce fare revenue by 17%.
ComfortDelGro's Position:
- Less Exposure to Fare Adjustments: Its fare-based business is a small part of its market value.
- More Stable Valuation: Offers better insulation against fare revision impacts.

SMRT:
- Rating: Sell
- Net Income Forecast: Reduced by 42% in FY15E, 41% in FY16E, and 63% in FY17E.
- Target Price: Reduced by 33% in FY15E.
ComfortDelGro:
- Rating: Buy
- Net Income Forecast: Reduced by 5% in FY15E and 5% in FY16E.
- Target Price: Reduced by 3% in FY15E.

Figure 1: Singapore's population target of 6.7m in 2030.
Figure 2: Emphasis on growing public transport share drives long-term ridership growth of 2.3% per annum.
Figure 3: Fare revision forecasts.
Figure 4: Sector's fare revenue base will continue to expand.
Figure 5: ComfortDelGro will gain rail network share.
Figure 6: Opening of DTL Stage 2 may cannibalize 17% of SMRT's fare revenue.