SMRT

SMRT: Annouced 2Q12 results which was below expectations. Rev at $261.1, +6.1% yoy and +3.2% qoq, while net income at 34.1m, -25.6% yoy and -2.1% qoq.

Healthy ridership growth drove rev, +3% qoq to $261m, but this was offset by a +4% qoq rise in operating expenditure, notably on higher electricity and depreciation costs. Mgt reiterated its guidance that FY12 profit may be weaker than FY11 ($161m). Post Circle-line 4&5 opening on Oct 8, weekday CCL ridership jumped to a healthy 300,000/day (Sept: 180,000/day), however, expenses look likely to remain a drag near term.

At current price, valuation appears fair, with grp trading at an estimated 16.4x FY12 P/E vs its historical 10 yr forward P/E average of 15.6x. Ratings are as per follow:

Citi maintains Sell with $1.73 TP,
JP Morgan Maintains O/w with $1.90 TP and
Nomura maintains Neutral with $2.05 TP.