SMRT

SMRT: SMRT's 4QFY14 results beat estimates, as net profit turned around to $16.9m from loss of $11.9m, mainly from the absence of a $17.3m goodwill impairment in associate- Shenzhen Zona, as well as a 34% increase in other operating income attributed to the government's bus service enhancement programme grant. Meanwhile, revenue increased 3% y/y to $289.5m, driven by rental (+11%) and advertising (+12%) segments, on an increase in lettable space from the redevelopment of Woodlands Xchange and rental uplift, as well as more advertising on trains, buses and stations. The top line was partially mitigated by an 8% decline in LRT from lower ridership and less external fleet maintenance, which caused the other services segment to fall 15%. Although losses narrowed for its fare businesses in the quarter to $3.8m (from loss of $11.4m), SMRT recorded a full-year operating loss of $25m in the core transport segment, the first time in history, amid higher operating costs to meet ridership demands and regulatory standards. Deutsche notes various positive trends in the 4th quarter, including fairly stable revenue growth and operating margin recovery, and is evidence of stabilization in SMRT's service enhancement efforts, with potential further operational improvements going forward. The fare adjustment that went effective in Apr should offer an additional boost to SMRT next set of results. SMRT proposed final DPS of 1.2¢, bringing FY14 total to 2.2¢, translating to a 1.8% yield on the current price of $1.21.