SMRT

SMRT: Weak set of 4Q13 results which was below estimates, as the grp registered a net loss of $11.9m vs a profit of $13.9m y/y. Result brings FY13 rev to $1.1b, +5.9% y/y and net profit to $83.3m, -30.5% y/y Results were weighed largely by the deteriorating profitability due to higher repair and maintenance (R&M) costs in Train and bus operations and higher staff costs for the Grp. In addition, there was a goodwill impairment of interest in associate Shenzhen Zona of $17.3m. For the year, SMRT’s Bus operations saw operating profit plunge 165% to a net loss $30.8m, while the group’s train operations saw operating profits losing 28.4% to 65.1m. Going forward, grp note that its profitability will be further eroded in the next 12 mths by the continuing misalignment btwn fares and operating costs, and losses in the bus business in particular will continue to increase due to higher operating costs associated with higher energy and staff costs. The group is currently in discussions with the govt on more sustainable models for both the Trains and Bus businesses. These models will have an impact on the short-term profitability and improve the long-term sustainability of the businesses. In line with the lower profit, the Board has proposed a final dividend of 1c per share. Including the interim 1.50c, this will bring total FY2013 dividend to 2.5c. (1.7% yield)