SBS Transit

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#71
Transport Minister Lui Tuck Yew said on Monday that transport fares are likely to go up in the coming years though they should stay affordable for the average commuter.

Lui said this in Parliament after announcing that the government fully accepted the recommendations submitted last week by the Fare Review Mechanism Committee (FRMC), including two new concession schemes – one for low income workers and the other for persons with disabilities.

Following the acceptance of FRMC’s report, the Public Transport Council (PTC) will then apply the new fare formula for the next fare review exercise and consider how to incorporate the committee’s recommendations on existing concessions.

Lui urged the PTC to consider the possibility that any fare increase for the next round of fare adjustment not exceed the average national wage increase so that transport fares would not be less affordable.

The minister also said it was likely that PTC’s decision and implementation on the fare review will likely be in the first half of next year rather than be in this year as the council will need time to go through various deliberations.

Meanwhile, Lui said the ministry has yet to determine the details of the two concession schemes but that it estimates that roughly about half a million Singaporeans who are disabled and needy will benefit.

Lui also said that the exact amount of discounts to be given to the needy and disabled have yet to be decided but he assured that the discounts given will “more than offset” transport fares the people in those groups.

In addition, about one million commuters such as pre-schoolers and students, including those in Polytechnic schools, will also benefit from the new fare exercise in some way, Lui said.

He also acknowledged the “unhappiness” among Singaporeans with regards to the transport service levels in the country, and that some people had suggested suspending fare increases until there is a tangible improvement in service levels.

However, Lui said that the FRMC had decided that the issue of service level is best addressed separately outside the fare formula.
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#72
What is the expected wage increase in 2013?
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#73
(11-11-2013, 11:55 PM)ARC Wrote: What is the expected wage increase in 2013?

I don't know the official figure, but figure from public surveys is approx 4.5%. So the max fare increment should is around 4.5% next year.

Will it make a difference in PnL of PTOs?

(not vested)

Ref: http://business.asiaone.com/news/singapo...rveys-show
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#74
From my research, I found figures between 4 - 5% for wage increase in 2013. Sounds a bit too high, imo. If want to be conservative, I think we can use a 3% as a reference point.

This 3% figure is the upper bound for the fare increase as per the news articles out there. This will translate to an apprx 2 - 2.5c fare increase. A 1c increase in fare could lead to a 3.5% increase in earnings for ComfortDelgro, by my calculations. So a 2 - 2.5c could lead to a 7.0 - 8.8% increase in earnings.

This of course assumes 1) a full fare increase for both its rail and bus biz (they could increase by different amts); 2) no leakage of that fare increase to other things such as a 'fund'/concession schemes, etc.

It also assumes that a fare increase will materialise. But that is probable given that they had no fare increase in 2012 and 2013.

On the whole, there should be uplift to Comfort's earnings in FY14F. It is a matter of how much. The fare increase, when it happens, could be a catalyst for the re-rating of the stock. For a coy that sees earnings growth of only 5 - 7% p.a on average, this may be a significant event.

Caveat Emptor
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#75
(12-11-2013, 04:05 PM)ARC Wrote: From my research, I found figures between 4 - 5% for wage increase in 2013. Sounds a bit too high, imo. If want to be conservative, I think we can use a 3% as a reference point.

This 3% figure is the upper bound for the fare increase as per the news articles out there. This will translate to an apprx 2 - 2.5c fare increase. A 1c increase in fare could lead to a 3.5% increase in earnings for ComfortDelgro, by my calculations. So a 2 - 2.5c could lead to a 7.0 - 8.8% increase in earnings.

This of course assumes 1) a full fare increase for both its rail and bus biz (they could increase by different amts); 2) no leakage of that fare increase to other things such as a 'fund'/concession schemes, etc.

It also assumes that a fare increase will materialise. But that is probable given that they had no fare increase in 2012 and 2013.

On the whole, there should be uplift to Comfort's earnings in FY14F. It is a matter of how much. The fare increase, when it happens, could be a catalyst for the re-rating of the stock. For a coy that sees earnings growth of only 5 - 7% p.a on average, this may be a significant event.

Caveat Emptor

The fare impact analysis base on ComfortDelGro figures are inappropriate, using SBST figures are more suitable, IMO
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#76
Sure, it will depends on what your interest is in. Naturally, the impact on SBST will be even greater. After all, in arriving at the impact on ComfortDelgro, I had to work up from the SBST level.

I don't have the % accretion number off hand, but a 1c increase should lead to a ~S$12.5mn increase in earnings for SBST, if memory serves me right.
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#77
(12-11-2013, 04:55 PM)ARC Wrote: Sure, it will depends on what your interest is in. Naturally, the impact on SBST will be even greater. After all, in arriving at the impact on ComfortDelgro, I had to work up from the SBST level.

I don't have the % accretion number off hand, but a 1c increase should lead to a ~S$12.5mn increase in earnings for SBST, if memory serves me right.

My back-of-envelope calculation, reveals similar numbers.

One point to note is half of the increment will be shared with commuters, so the max increment will be 3-4%, instead of 7-8%, on ComfortDelgro level.

(not vested)
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#78
(12-11-2013, 10:17 PM)CityFarmer Wrote:
(12-11-2013, 04:55 PM)ARC Wrote: Sure, it will depends on what your interest is in. Naturally, the impact on SBST will be even greater. After all, in arriving at the impact on ComfortDelgro, I had to work up from the SBST level.

I don't have the % accretion number off hand, but a 1c increase should lead to a ~S$12.5mn increase in earnings for SBST, if memory serves me right.

My back-of-envelope calculation, reveals similar numbers.

One point to note is half of the increment will be shared with commuters, so the max increment will be 3-4%, instead of 7-8%, on ComfortDelgro level.

(not vested)

"The sharing of gains could range from 20% - 50% of expected increase in fare revenue, depending on profitability, according to Mr Magnus."

So yes, there will be some leakage, up to 50% of fare increase.

On a side note, see this quote from a CNA article on how the fare increase will be calculated:
"Mr Lui said the PTC will consider the 2012 fare cap, based on the old formula, which was suspended pending the fare review, and the 2013 fare cap based on the new formula."
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#79
Fare Review is out

3.2% Fare hike for adults.

http://www.straitstimes.com/the-big-stor...hnic-stude
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#80
Seems like next year also might have fare increase. Seow liaoz!

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