SMRT Corporation - OCBC Investment 2016-07-07: Defects on trains covered under warranty

SMRT Corporation - OCBC Investment 2016-07-07: Defects on trains covered under warranty SMRT CORPORATION LTD S53.SI 

SMRT Corporation Ltd: Defects on trains covered under warranty

  • An article reported by Hong Kong media on Tuesday revealed that several of Singapore’s first China-made trains operated by SMRT Corporation Ltd (SMRT) are being shipped back to their manufacturers (i.e. CSR Qingdao Sifang and Kawasaki Heavy Industries) for structural defects. 
  • According to SMRT, its engineers discovered that 26 of the 35 trains delivered by the manufacturer had cracks in the structure connecting the car body and the bogie after they were delivered in 2013. And since then, SMRT has been working with LTA and manufacturer to send the defective trains, which are still under warranty, in small batches back to the manufacturer for repairs. 
  • According to Ministry of Transport, these repair works will be completed by 2019. 
  • While SMRT has yet to state how sending back these trains will affect operations, we note that it is unlikely SMRT will be required to pay for any costs involved since these defects are still under manufacturer’s warranty. 
  • Maintain HOLD with an unchanged FV estimate of S$1.55.




Eugene Chua OCBC Securities | http://www.ocbcresearch.com/ 2016-07-07
OCBC Securities Analyst Report HOLD Maintain HOLD 1.55 Same 1.55


Advertisement



MOST TALKED ABOUT STOCKS / REITS OF THE WEEK



loading.......



ANALYSTS SAY


loading.......