SG Transport

SG Transport: RHB-OSK note that higher penalty on bus service quality standards likely to have minimal impact on operators. The Public Transport Council (PTC) has revised the financial penalty quantum for non compliance with the Quality of Service (QoS) standards for basic bus services. It has been revised from a range of between $100 a day per bus service to $10,000 a month per standard, to between SGD2,000 a day per bus service to $100,000 a mth per standard. House see these penalty increases to have minimal impact to operators. Based on estimates, with reference to equivalent penalties imposed in 2011, the recent revised penalty quantum would account for less than 1% of both ComfortDelGro and SMRT’s FY13 PATMI. Prefer ComfortDelGro (BUY TP $2.10) over SMRT (NEUTRAL TP $1.55) on cheaper valuations and overseas growth potential.