SMRT

SMRT: The tender for the Thomson-East Coast MRT line is expected to be announced in the coming months, and the potential award of the operating license would be a strong positive catalyst for SMRT. Based on public indications from the government, UBS remains confident that a transition to an asset-light model for trains will occur, with SMRT as the major beneficiary. In furture, management intends to use net proceeds when available from the asset sales to partially repay debt (~$740m), and also reinvest in areas such as engineering development. On the bus division, SMRT is optimistic that losses will narrow in FY15, from cost reductions and fare increases. Contracts for the first of 12 public bus package tenders are expected this year, and UBS anticipate keen interest from both local and foreign operators. The house has a Buy rating with $1.81 TP.