21-05-2014, 07:55 AM
PUBLISHED MAY 21, 2014
SMRT shares jump to 11-month high
BYANITA GABRIEL
anitag@sph.com.sg @AnitaGabrielBT
SMRT Corp shares revved up to the highest in 11 months after it jumped 14.5 cents or 11 per cent to $1.475 yesterday.
This is the second time since April that the counter has spiked sharply, which analysts had by and large earlier dismissed as speculative hype.
But the surge this time, they say, may be premised on an imminent industry shake up or policy changes in the public transportation space which could benefit transport operators.
Last month, SMRT, the largest rail operator, submitted a detailed proposal to the Land Transport Authority on the new rail-financing framework.
Many believe that SMRT has made some headway on the new framework, which involves the treatment of the rail assets owned and operators' asset purchase obligations. The whole idea behind the framework is to make the sector more sustainable, hence there is the sweet expectation that it will be favourable to the operators.
But the devil, understandably, is in the details.
"The price at which assets are to be sold to LTA and future licensing charges are two key parameters to watch," said Maybank Kim Eng Research, adding that given the lack of clarity, it is highly speculative to conclude that it will benefit the operators.
There may be other factors behind the renewed interest in SMRT shares. The firm recently reported that it had swung back to the black in its fiscal fourth quarter, leading many to believe that the worst could be over.
The improved showing was driven by a sharp reduction in operating loss in its bus operations owing to better cost control and a stronger outing in the non-fare business.
Since April 23, shares of the transport firm have surged over 40 per cent or 45 cents, nudging closer to a year's high of $1.525 which it reached in late June last year.
On April 24, the strong run-up in its share price of nearly 19 per cent provoked a trading activity query from the Singapore Exchange, but yesterday's movement did not prompt a similar action from SGX.
The exuberance has not solely been centred on SMRT but has also been shared by industry peer ComfortDelGro, whose shares have had a good run on the back of encouraging first quarter earnings and expectations that it could benefit from changes in the public transportation policy.
Yesterday, ComfortDelGro finished seven cents or 3 per cent up at $2.38, a high not seen in at least five years.
Maybank Kim Eng Research issued a report on Monday on the imminent taxi shake-up with new entrants, armed with innovative app-based business models, growing their presence in Singapore.
There have been concerns that this could result in taxi booking income losses but Maybank Kim Eng said that the impact on taxi operators' profitability would be minimal. On the other hand, the research house expects the overall industry revenue pool to be augmented, hence benefiting the operators in the long run.
SMRT shares jump to 11-month high
BYANITA GABRIEL
anitag@sph.com.sg @AnitaGabrielBT
SMRT Corp shares revved up to the highest in 11 months after it jumped 14.5 cents or 11 per cent to $1.475 yesterday.
This is the second time since April that the counter has spiked sharply, which analysts had by and large earlier dismissed as speculative hype.
But the surge this time, they say, may be premised on an imminent industry shake up or policy changes in the public transportation space which could benefit transport operators.
Last month, SMRT, the largest rail operator, submitted a detailed proposal to the Land Transport Authority on the new rail-financing framework.
Many believe that SMRT has made some headway on the new framework, which involves the treatment of the rail assets owned and operators' asset purchase obligations. The whole idea behind the framework is to make the sector more sustainable, hence there is the sweet expectation that it will be favourable to the operators.
But the devil, understandably, is in the details.
"The price at which assets are to be sold to LTA and future licensing charges are two key parameters to watch," said Maybank Kim Eng Research, adding that given the lack of clarity, it is highly speculative to conclude that it will benefit the operators.
There may be other factors behind the renewed interest in SMRT shares. The firm recently reported that it had swung back to the black in its fiscal fourth quarter, leading many to believe that the worst could be over.
The improved showing was driven by a sharp reduction in operating loss in its bus operations owing to better cost control and a stronger outing in the non-fare business.
Since April 23, shares of the transport firm have surged over 40 per cent or 45 cents, nudging closer to a year's high of $1.525 which it reached in late June last year.
On April 24, the strong run-up in its share price of nearly 19 per cent provoked a trading activity query from the Singapore Exchange, but yesterday's movement did not prompt a similar action from SGX.
The exuberance has not solely been centred on SMRT but has also been shared by industry peer ComfortDelGro, whose shares have had a good run on the back of encouraging first quarter earnings and expectations that it could benefit from changes in the public transportation policy.
Yesterday, ComfortDelGro finished seven cents or 3 per cent up at $2.38, a high not seen in at least five years.
Maybank Kim Eng Research issued a report on Monday on the imminent taxi shake-up with new entrants, armed with innovative app-based business models, growing their presence in Singapore.
There have been concerns that this could result in taxi booking income losses but Maybank Kim Eng said that the impact on taxi operators' profitability would be minimal. On the other hand, the research house expects the overall industry revenue pool to be augmented, hence benefiting the operators in the long run.
30 milos, funds buying!