SMRT

SMRT: announced last wk, salary hikes of 7-15% for its 1,900 bus drivers, or ~ 30% of its staff. HSBC raises staff cost estimates by 10-15% for FY13-15e on salary hikes and headcount increases, which more than offset its 24-31% increase for its taxi revenues (11% of group). Cuts FY13-15e profits by 8-10%. HSBC continues to reiterate its Underweight call, but revises TP upward from $1.53 to $1.60 on lower WACC (new debt moves SMRT’s long term cost of debt to 2.5% from 2.9%).