SBS Transit - CGS-CIMB Research 2021-02-09: On The Road To New Normal

SBS TRANSIT LTD (SGX:S61) | SGinvestors.io SBS TRANSIT LTD (SGX:S61)

SBS Transit - On The Road To New Normal

  • SBS Transit reported a FY20 net profit of S$79.0m (-2.9% y-o-y), slightly above our expectations, supported by better-than-expected cost control.
  • Ridership recovery in FY21F could be supported by further relaxation in social-distancing measures, with a ramp-up of vaccine roll-out in Singapore.
  • Reiterate ADD and target price of S$3.60.



SBS Transit's 4QFY20 earnings above expectations

  • SBS Transit (SGX:S61) reported a 4Q20 net profit of S$27.1m (+40% q-o-q, +65% y-o-y), bringing its FY20 net profit to S$79.0m (-2.9% y-o-y), above expectations at 105% of our previous forecast due to better-than-expected cost control.
  • SBS Transit's earnings recovery was underpinned by:
    1. continuous JSS support, and
    2. continued rail ridership recovery.
  • As SBS Transit’s FY20 profitability was mainly supported by government grants, dividend payout ratio was lowered to 25% (FY19: 50%). Final dividend of 6.3 cents implies a yield of 2.1%.


Returning to a new normal

  • With community cases of COVID-19 remaining low, and a further ramp-up of the vaccine roll-out in Singapore, we expect further relaxation in social-distancing measures in coming months, which could support public transport ridership recovery.
  • We forecast rail ridership to only recover to 90% of pre-COVID-19 levels by end-2021F, as we believe that in the new normal, there will be less commuting due to increased flexibility in work arrangements, which may not necessitate daily travels to work.
  • Despite significant tapering in JSS receivables to ~S$28m in FY21F (FY20: S$110m), we believe SBS Transit can still report a stronger net profit of S$80.8m (+2.3% y-o-y).


Read through to ComfortDelgro’s 4QFY20’s results


Reiterate ADD and target price of S$3.60






ONG Khang Chuen CFA CGS-CIMB Research | Darren ONG CGS-CIMB Research | https://www.cgs-cimb.com 2021-02-09
SGX Stock Analyst Report ADD MAINTAIN ADD 3.600 SAME 3.600



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