Are There Any Good Transport Companies In Singapore To Invest In At All?

Yesterday, bus and train services provider SMRT Corporation Ltd (SGX: S53) experienced one of its worst disruptions along its North-South and East-West train lines. The disruption, which started around 7pm on Tuesday, had affected more than 250,000 commuters across the island. SMRT has since resumed the train services.

This incident may be one of SMRT’s worst, but it’s certainly not the first; thing is, SMRT has been struggling with unreliable services and unhappy commuters for a number of years now and this has partly led to its business facing severe pressure. To that point, SMRT’s net income has fallen from S$163 million in FY2010 (fiscal year ended 31 March 2010) to just S$62 million in FY2014.

What’s unfortunate here is that SMRT seems to not be the only transport company based in Singapore that’s suffering. From the air to sea to land, most transport providers are struggling.

On land, SBS Transit Ltd (SGX: S61), a direct competitor to SMRT, is another great example: Its profits have collapsed from S$54 million in 2010 to just S$14 million in 2014.

At sea, container shipping outfit Neptune Orient Lines Limited (SGX: N03) has been sailing in troubled waters – the company has been making a loss in each year since 2011.

Year Neptune Orient Lines’ profit
2011 -US$478 million
2012 -US$413 million
2013 -US$76 million
2014 -US$260 million

Source: S&P Capital IQ

Neptune Orient Lines has recently sold off its profit-generating logistics business and is still  trying to turn around its container liner arm.

As for air transport, Tiger Airways Holdings Limited (SGX: J7X) might be seeing its flights soar into the skies daily, but it’s watching its business results sink as you can see in the table below. The losses are mounting despite the company having already sold off most of its business interests outside of Singapore.

Fiscal year ended 31 March Tiger Airways’ profit
2012 -S$104 million
2013 -S$45 million
2014 -S$223 million
2015 -S$264 million

Source: S&P Capital IQ

Meanwhile, Tiger Airways’ main shareholder Singapore Airlines Limited (SGX: C6L) is a profitable enterprise. But, it has only managed to achieve a return on equity of less than 3% over its past four fiscal years – these aren’t remotely close to the numbers that a quality business should produce.

It seems that the only transport company in Singapore that’s still doing well is Comfortdelgro Corporation Ltd (SGX: C52). The company’s profit has been inching up at a pace of around 5% annually over the past five years and the firm has also been able to generate a return on equity of around 12% over the same timeframe. But, the company might have to contend with threats from mobile applications like Grabtaxi and Uber which are gaining prominence both regionally and globally; these are risks that Comfortdelgro may not have the luxury to ignore.

Foolish Summary

It’s unfortunate, but there are hardly any transport providers in Singapore’s stock market that’s in a good business position at the moment. Are these companies facing long-term declines in their businesses or are the issues they have only temporary? These are important questions for investors to ponder seriously before before any investing decision can be made.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim does not own any companies mentioned above.