SMRT

[brattzz]

when and what price and div. yield?

It's any body's guess, gut feel is >7% div.yield can go all in liao.

[KopiKat]

when and what price and div. yield?

It's any body's guess, gut feel is >7% div.yield can go all in liao.

Wouldn't that be Share Price < $1.06, even if we were to assume they pay 100% of Net Profit (stated policy is at least 60%). I'm also doing a quick ball park estimate using Q4 EPS = 0 (they stated in their profit warning that it'll be a loss) which means FY13 EPS is max 6.3ct (3Qs figures). This means your target price will very likely be lower than $1.06, depending how bad is the losses for Q4 and also the final payout % (if 60%, then your target price drops to $0.54....).

[brattzz]

ok, too high a yield..

maybe lower expectation, >5%.

[Temperament]

i don't remember the Market has ever allowed SMRT to reach 7% yield. So it is the same with S'post, i think. MAX yield is 5 to 6 %.(Correct me if i am wrong).

[investingsgx]

SMRT issued a profit guidance on SGX.

Increasing operating costs without corresponding fare adjustments have adversely affected the Group’s profitability. In addition, the Directors are of the view that it is appropriate to impair $17 million of goodwill in its associate, Shenzhen ZONA Transportation Group Co. Ltd., which will result in a loss for 4Q FY2013.

Source:http://info.sgx.com/webcoranncatth.nsf/V...penelement

SMRT's 54% of revenue comes from train operations while about 10% of its revenue from taxi. Although their taxi operations have increased close to 200% in operating profit, the increase in staff costs, operation and repair costs have dragged down their profits. These costs are long term costs which will affect SMRT in the long run if they are not reduced.

Costs cannot be prevented if SMRT trains are to operate with certain level of reliability else it will affect the reputation of the government, especially when COE price is high which affect the low affordability of car purchases in Singapore.

(Not vested)

[KopiKat]

ok, too high a yield..

maybe lower expectation, >5%.

Yes, a target of 7% in current bullish market is a bit on the high side. But then again, since the Yield is based on Dividends paid, which in turn is based on the Net Profit, a target price of say $1.06 which may achieve your target 7% yield may in future give lower or even zero yield if their earnings continue to deteriorate...

The last time SMRT offers a 7% Yield must have been aro' 2005 when it was trading closer to $1. Although I did buy some back then, I'd quickly also switched out to other higher yielding stocks of 8-10% as there were many such alternatives back then...

So, for your 5% Yield target, the price adjust up by 20ct ie. $0.75 to $1.26 for a range of 60-100% Dividend Payout ratio. This is based on the best (impossible as they'd guided for a loss) case of zero Q4 EPS. Your target band will have to be adjusted down, depending on the Q4 losses.

For reference,
- $17M impairment equates to an earnings reduction of 1.12ct/share
- Q3 EPS = 1.7ct
- Q4 (last year) EPS = 0.9ct (IIRC, includes impairments or provisions)

Have fun with Sensitivity Analysis and setting target price...I'll keep in my watch list for Monday reactions to this Profit Warning... May have to wait till end-Apr or Beg-May when they finally release their Q4 results..

[paullow]

i don't remember the Market has ever allowed SMRT to reach 7% yield. So it is the same with S'post, i think. MAX yield is 5 to 6 %.(Correct me if i am wrong).

Hi Temperament,

allow me to share my view on SP n SMRT

-both are defensive stocks. to go bust in them is virtually unthinkable.

-SP has a crown jewel in paya lebar. I don't know if SMRT has any crown jewel.

-if u have caught SP in 60-80c range in 2009, you would have gotten perhaps 1/3 of your capital back, just based on dividends, NOT taking into account HUGE capital gains.

-but similarly, if u have caught SMRT at 140c back in 2009, u would probably gained 1/5 of your capital just based on dividends, but little capital gains as of the latest closing price.



That's my observation with SMRT N SP.

[pubster]

Dear all,

Thank you for all your views.

Guess the dividends this time round will be at most slightly less than 4%(100% payout of profit). Most likely it will be in the low 2% or even lower than 2%. This is if the 4Q losses is negligible... Of course I hope not to see the price goes down drastically to push up the yield.

I don't expect to see its dividend going up anytime soon with its recently increased in salary and maintenance. Profit most likely to be half or even lesser when compared with 2010/2011.

I do not expect the PTC to increase the fares anytime soon(negative sentiment aboout public transport) so just gotta live with the low yield(as compared to my high buying price) for a couple of years. But maintaining the fare is good as common people(including me) will be affected adversely if there is a hike.

Anyway, thanks a milions for the views. Luckily I'm in for the long haul. Just need to put the untouchable money(CPF) to work for the next 30 years. Hopefully the investment will be able to beat inflation over 30 years.

Enjoy the weekend.

[weijian]

Some additional pointers:

- Traditionally, SMRT has ~70-80% payout ratio (net profit). The only exception was FY12 and payout ratio was ~94%. It may be rationalized that payout ratio was abnormally high because the 21mil bus goodwill write down in FY12 (4Q) was a non-cash cost.
- Residual goodwill on balance sheet: From AR12, there is still a 13mil taxi operations and 50mil ShenzhenZONA (17mil deducted from 67mil value). Since the taxi operations have turned, the question is 'is 17mil of impairment aggressive enough? or will the new CEO continue to write down more in FY14 and give himself a low base to build his legacy on?

(vested)

---

I do not expect the PTC to increase the fares anytime soon(negative sentiment aboout public transport) so just gotta live with the low yield(as compared to my high buying price) for a couple of years. But maintaining the fare is good as common people(including me) will be affected adversely if there is a hike.

Anyway, thanks a milions for the views. Luckily I'm in for the long haul. Just need to put the untouchable money(CPF) to work for the next 30 years. Hopefully the investment will be able to beat inflation over 30 years.

Enjoy the weekend.

hi pubster,
sorry to be negative here..
- As a shareholder+public transport taker, WE are much better off with raised rates.
- Been 'in for the long haul' is scant consolation. A 40% drop requires a 67% increase just to break even again. If dividend yield is 7%, still need at least 10years to break even. It is hard to envision that it will be able to overcome the risk free 2.5% CPF OA and/or inflation rate given the 10year handicap.

[pubster]

hi pubster,
sorry to be negative here..
- As a shareholder+public transport taker, WE are much better off with raised rates.
- Been 'in for the long haul' is scant consolation. A 40% drop requires a 67% increase just to break even again. If dividend yield is 7%, still need at least 10years to break even. It is hard to envision that it will be able to overcome the risk free 2.5% CPF OA and/or inflation rate given the 10year handicap.

H Weijian,

Thank you for your reply.

As a shareholder, of course I also do hope for a fare increase. More profit means more dividends for me. I do not take public transport often due to the nature of my work(overseas most of the weekdays) and having a weekend car. But I do know some people around me fretting on every rise of the fares. What I hope is SMRT coming up with other means to offset the increase in overhead.

I understand that playing catching up might be tough. Thats why I accumulating the next set of bullets hoping to catch the lows to average it down. Hopefully Im not throwing good money after bad.

Cheers and enjoy the Sunday evening.