SMRT

SMRT: Weak 2Q13 results which was in-line. Rev at $281.2m, +7.7% yoy and +2.2% qoq, while net profit at $33.3m, -2.2% yoy and -8.8% qoq. Ebitda margins at 28% was flat yoy. Rev was led by fare and non-fare businesses, which recoded higher rev of 7.4% and 8.6% yoy respectively. Trains led growth with rev at $154.5m, +9.7% yoy, with higher ridership and contribution from the opening of circle line. Higher rev for bus, taxi, rental and advertising rev also contributed to grp’s topline. Grp’s operating profit was however impacted by higher operating losses from bus segment and higher operating expenses in MRT, on back of higher repairs and maintenance and staff costs. Going forward, grp expect rev growth to continue, but cost pressures will remain. This is to be expected with a larger train fleet and stepping up of efforts to maintain reliability of an ageing rail network as well as taking over of certain operating assets frm LTA. Overall, fundamentals remain strong with a net gearing of 4% and current annualized yield stands at approx. 4.3%. Ratings as follow: Citi maintains Sell with $1.30 TP Deutsche maintains Hold with $1.59 TP Maybank-KE maintains Sell with $1.37 TP Nomura maintains Neutral with $1.75 TP UOB Kay Hian maintains Sell with $1.27 TP