SMRT

SMRT: in collaboration with the Nation Transport Worker’s Union, announced that it will raise basic wages of all non-executive staff (~4,600 employees) by $320/mth from 1 Mar. In addition, SMRT will pay a one-off $1,000 “market adjustment” payout per person. Mgt stated the incremental cost of revision to the group is $10m for 4QFYMar13. Analysts expect further impact of $25-30m in wage expenses in FY14e. Credit Suisse lowers FY14e net profit by 12%, reduces TP to $1.20 from $1.30, in addition to its earlier downgrade. Keeps Underperform rating. Highlights risk of impending div cut and exaggerated valns. Nomura has a Reduce rating with TP $1.57.