SMRT

SMRT: Trains experienced five disruptions over the past two weeks across the North-South Line (NSL), East West Line (EWL), Circle Line (CCL), and Bukit Panjang LRT Line.

Last year, SMRT were fined S$1.6m for two safety breaches and two train disruptions. Of the $1.6m, the heavier fines came from the two safety breaches amounting to a total of $1.3m.

With these disruptions deemed unacceptable by LTA, OCBC updated its forecasts to provide for fines in FY16 with an amount slightly more than twice of what was paid in FY15. House expects higher expenses in FY16 and beyond based on SMRT’s plans to improve rail reliability announced last Friday.

However, OCBC remains largely positive as their growth catalysts are still valid. House reiterated BUY on SMRT on positive growth outlook, although TP is slightly reduced from $1.90 to $1.85.