Land Transport

Land Transport: Public transport fares will rise 3.2% this year and 3.1% next year. From 6 Apr, adult card fares for buses and trains will go up by 4-6¢ per journey, while student concessionary fares will rise by 2¢ per journey and senior citizen concession fares by 2-3¢. Ccash fares will cost more, with adult bus and train rides climbing 20¢ per trip, and concession cash fares up 10¢ per trip. Maybank-KE says the fare hike of 3.2% for 2013 is below its expectations for a 5% revision. After adjusting for the one-off contribution to fund needy commuters, SBS Transit (75% owned by ComfortDelgro) and SMRT will receive net benefits of $28.8m and $13.2m respectively. The house believes the net benefits will not be sufficient to ease the margin pressures facing SMRT’s fare based business. Adding to the headwinds arising from persistent cost pressures, SMRT faces the threat of cannibalization from the opening of Downtown Line Stage 2 in 2016. Maybank-KE reiterates its Sell rating on SMRT with TP $0.60. Prefers ComforDelgro which offers a more insulated exposure with Singapore’s fare based business accounting for <8% of its market value. Buy with TP $2.31.