10 Things to Know About SBS Transit Ltd’s Latest Earnings

Yesterday, SBS Transit Ltd (SGX: S61) announced its financial results for the third quarter and nine months ended 30 September 2017.

Here are 10 things investors should know from the earnings announcement:

1. Revenue for the 2017 third-quarter grew 7.4% year-on-year to S$295 million.

2. Revenue from Public Transport Services was 8.3% higher year-on-year to S$280.5 million largely 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 and lower other operating income”.

3. However, Other Commercial Services revenue slumped 7.7% to S$14.5 million on the back of lower advertising and rental revenue.

4. Net profit attributable to shareholders ballooned 42.1% to S$11.1 million.

5. Consequently, diluted earnings per share for the quarter rose to 3.57 Singapore cents, up from 2.52 cents a year ago.

6. Net profit margin improved one percentage point from 2.8% last year to 3.8% in the 2017 third-quarter.

7. The balance sheet held S$5.2 million in cash and bank balances, and S$214.5 million in total debt as of 30 September 2017. This translates to a net debt position S$209.3 million. SBS Transit’s balance sheet improved from 30 September 2016 when it had a net debt of S$292.8 million (S$4.7 million in cash and bank balances, and S$297.5 million in total debt).

8. Operating cash flow for the quarter was at S$62.1 million. A year ago, there was an operating cash flow of negative S$53.3 million. With capital expenditure increasing from S$2.6 million a year ago to S$11 million in the latest quarter, SBS Transit’s free cash flow grew from a negative S$55.9 million last year to a positive S$51.1 million this year.

9. On a nine-month basis, revenue improved 7.3% year-on-year to S$866.2 million while net profit surged 47.1% to S$34.1 million.

10. As for its outlook, SBS Transit said that revenue from Public Transport Services is expected to be higher due to a full year contribution of revenue under the BCM and increased ridership from the opening of Downtown Line 3 last month. Rail fare revenue, though, will be affected by the fare adjustment effective 29 December this year. Revenue from Other Commercial Services is likely to be lower mainly due to the loss of Loyang and Bulim bus packages.

At Thursday’s closing price of S$2.53, the firm is selling at 18.6 times its trailing earnings and has a trailing dividend yield of 2.5%.

Keep up to date on the latest financial and stock market news by signing up now for a FREE subscription to The Motley Fool's investing newsletter, Take Stock SingaporeIt will teach you how you can grow your wealth in the years ahead too.

Also, like us on Facebook to follow our latest hot articles. The Motley Fool's purpose is to help the world invest, better.

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 Ltd. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.