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SBS Transit Drives in a Robust Set of Results for 2017

SBS Transit Ltd (SGX: S61), as many may already know, provides bus and rail services to the Singapore public. Yesterday, the firm announced its financial results for the full year ended 31 December 2017.

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

1. Revenue for the year rose 8.5%, from S$1.10 billion to S$1.19 billion.

2. SBS Transit operates two business segments, namely, Public Transport Services and Other Commercial Services. Revenue from Public Transport Services, which consists of bus and rail operations, grew 9.8% year-on-year to $1.14 billion. The increase was largely due to a full year contribution of revenue under the Bus Contracting Model and higher ridership from rail services with the opening of Downtown Line (DTL) 3 in end-October 2017. This was offset by “lower average rail fare from the fare reduction effective 30 December 2016 and lower other operating income”.

3. On the other hand, revenue from Other Commercial Services (consisting of rental and advertising businesses) declined by 12.4% to S$56 million. This was mainly on the back of “lower advertising and rental revenue from the loss of Bulim and Loyang Bus Packages”.

4. Net profit attributable to shareholders for the year soared 50.3% year-on-year to S$47.1 million.

5. Net profit margin for 2017 came in at 4.0%, up from 2.9% a year ago.

6. Diluted earnings per share (EPS) for the year increased from 10.12 cents a year ago to 15.15 cents.

7. The balance sheet improved for 2017. As at 31 December 2017, it held S$5.3 million in cash and bank balances, and S$181 million in total borrowings. This translates to a net debt position of S$175.7 million. In comparison, exactly one year back, it had S$211.7 million in net debt (S$4.3 million in cash and bank balances, and S$216 million in total borrowings).

8. 2017’s operating cash flow was S$93.6 million, a vast improvement from S$64.9 million seen a year ago. With capital expenditure increasing from S$23.5 million to S$35 million for the year, SBS Transit’s free cash flow grew from S$41.5 million to S$58.6 million. The improvement came despite a 59% jump in trade receivables in 2017.

9. The board of directors proposed a final dividend of 3.95 cents per share, up from 2.70 cents declared in 2016. Including the interim dividend of 3.65 cents per share already dished out, the total dividend for 2017 would be 7.60 cents, up 50.5% as compared to the total dividend of 5.05 cents paid out in 2016.

10. SBS Transit had the following outlook:

“Revenue from Public Transport Services is expected to be higher. Bus service revenue is expected to be higher with the Seletar Bus Package which will commence operations on 11 March 2018. Rail service revenue is expected to be higher with a full year revenue contribution from the DTL 3 which opened on 21 October 2017. Rail fare revenue will be affected by the fare adjustment effective 29 December 2017.

Revenue from Other Commercial Services is expected to be maintained. Operating costs will be higher with higher staff costs following the salary adjustments and increments. Repairs and maintenance are expected to be higher. Premises costs are expected to be higher with full year effect of DTL 3 stations and the handover of the Seletar Depot.”

At yesterday’s closing price of S$2.58, SBS Transit has a trailing price-to-earnings ratio of 17 and a trailing dividend yield of 2.9%.

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