SMRT

SMRT: Deutsche recommending a Buy on SMRT this morning with a $1.80 TP. House recently met up with the grp, where the he current management team is aligned to build a structured and process-oriented company. Having gone through significant changes in the past two years SMRT has the capabilities to perform substantially better going forward. SMRT pointed out that its operations were stabilizing, which is in-line with the CEO’s previous comments about cost stabilization and analysts expectation that margin recovery will drive near-term earnings improvement. SMRT ruled out any near-term speculations of a privatization. Overall, SMRT’s share price has fallen 12% YTD versus a fairly flat FSSTI. At current share price, SMRT’s 1-year forward PE is back down to 2009/10 levels while PB is at a multi-year low. Deutsche sees limited downside risks and significant upside potential with improving earnings and potential reforms.