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SBS Transit Ltd’s Latest Earnings: Dividends up for the Quarter

Yesterday, SBS Transit Ltd (SGX: S61) announced its second-quarter earnings for 2017 (2Q 2017). The financial period was from 1 April 2017 to 30 June 2017.

Here’s a quick look at the financial figures from the latest quarter:

1. Revenue came in at S$287.8 million for the quarter, increasing by 7.0% or $18.8 million year-on-year.

2. Net profit surged 75.3% year-on-year to S$12.7 million. Net profit margin for 2Q 2017 was at 44.2%, a huge improvement as compared to 2Q 2016’s figure of 26.9%.

3. Consequently, earnings per share for the quarter was at 4.09 Singapore cents, up from 2.34 cents seen in 2Q 2016.

4. As of 30 June 2017, SBS Transit had S$247.8 million in net debt. This is a deterioration from S$211.7 million in net debt that it had on 31 December 2016. The net gearing ratio for 2Q 2017 was at 57.1%, which was higher than that of 50.7%, as at the end of last year.

5. Cash flow from operations was at S$35.8 million and S$3.2 million was spent on capital expenditure. Therefore, the transport outfit raked in S$32.6 million in free cash flow for the latest quarter, an improvement from the negative S$4.4 million brought in a year ago.

Revenue from Public Transport Services was 8.4% higher year-on-year at $274.4m for 2Q 2017. The increment was mainly due to “contribution from bus services with the transition to the Bus Contracting Model (BCM) and higher ridership from rail services, offset by lower average rail fare from the fare reduction effective 30 December 2016”.

Revenue from Other Commercial Services was at S$13.4 million, 15.3% lower year-on-year due largely to lower advertising revenue.

It looks like the change to BCM brought in higher margins for SBS Transit as well. It will be interesting to know how the full year of 2017 pans out for the firm.

Shareholders would be delighted to know that dividends for the latest quarter will balloon around 55%. They will receive an interim dividend of 3.65 Singapore cent per share for 2Q 2017, as compared to 2Q 2016’s interim dividend of 2.35 Singapore cents.

SBS Transit provided the following outlook:

“Revenue from Public Transport Services is expected to be higher. Bus service revenue is expected to be higher with a full year contribution of revenue under the BCM. Rail service revenue is expected to be higher with continued growth in ridership although this will be affected by the fare reduction effective 30 December 2016.

Revenue from Other Commercial Services is expected to be lower due mainly to the loss of Loyang and Bulim packages.”

Shares of the firm closed at S$2.59 on Thursday. This translates to a trailing price-to-earnings ratio of around 21 and a dividend yield of 2.5%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.The Motley Fool Singapore has recommended shares of SBS Transit. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.