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SBS Transit - CGS-CIMB Research 2021-08-12: Recovery Around The Corner

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

SBS Transit - Recovery Around The Corner

  • Singapore’s reversion to Phase 2 (Heightened Alert) since May 21 hurt SBS Transit’s 2Q21 results. Government grants kept SBS Transit in the black.
  • Supported by a high vaccination rate, Singapore is reopening its economy, which could aid SBS Transit’s ridership recovery.
  • Reiterate ADD on SBS Transit with an unchanged target price of S$3.50.



2Q21: Government grants remain a big help to SBS Transit

  • SBS Transit (SGX:S61) reported a 2Q21 net profit of S$13.2m (-43.5% q-o-q, -38.6% y-o-y). 1H net profit of S$36.5m (+11.9% y-o-y) was below expectations, at 48% of our FY21F forecast. The weaker y-o-y profitability in 2Q21 was mainly attributable to significantly lower government grants vs 2Q20. Excluding government grants, operating loss narrowed y-o-y to S$2.8m in 2Q21 (2Q20: S$42.7m operating loss).
  • SBS Transit resumed its interim dividend payout with a dividend of S$0.0575 per share, implying a ~50% payout ratio.


Rail ridership to recover with easing restrictions

  • With a high vaccination rate in Singapore, we expect government grants, we forecast SBS Transit to achieve an operating profit of S$14.4m in 2H21F (2H20: S$0.4m operating loss).


DTL financing framework reform remains a potential catalyst

  • The Downtown Line (DTL) financing framework review remains a key potential catalyst for SBS Transit this year, in our view. We see 27%-30% upside to SBS Transit’s FY22-23F net sustaining continuous losses.


Reiterate ADD on SBS Transit






ONG Khang Chuen CFA CGS-CIMB Research | Darren ONG CGS-CIMB Research | https://www.cgs-cimb.com 2021-08-12
SGX Stock Analyst Report ADD MAINTAIN ADD 3.500 SAME 3.500



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