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SBS Transit Ltd Latest Earnings: Sky-Rocketing Revenue And Profits

SBS Transit Ltd (SGX: S61) is a provider of bus and rail services in Singapore. Under the bus services, it runs multiple bus packages, which it had successfully bid for from the government. Under the rail services business, SBS Transit operates the North East Line (NEL), the Downtown Line (DTL), and the Sengkang and Punggol Light Rapid Transit (SPLRT).

SBS Transit announced its financial results for the full year ended 31 December 2018, yesterday. Let’s have a quick look to see how it did.

Financial highlights 

Here are some of the key financial highlights from the latest full-year results:

1) Revenue grew 16.1% year-on-year to S$1.38 billion.

2) Total operating costs increased by 13.6% to S$1.28 billion.

3) As a result, operating profit surged 64% to S$97.3 million.

4) Profit attributable to shareholders swelled by 70%, from S$47.1 million to S$80.1 million.

5) Consequently, diluted earnings per share improved from 15.15 cents to 25.71 cents, up 69.7%.

6) As of 30 September 2018, SBS Transit’s balance sheet had S$32.7 million in cash and bank balances, and S$75 million in total debt. This translates to a net debt position S$42.3 million, resulting in a net gearing ratio of 8.5%. This was an improvement from the S$175.7 million in net debt that SBS Transit reported at the end of 2017.

7) Operating cash flow improved 69.6%, from S$93.6 million a year ago to S$158.8 million. Capital expenditure, on the other hand, decreased from S$35.0 million to S$27.8 million. This resulted in SBS Transit’s free cash flow skyrocketing by 123.5%, from S$58.6 million to S$131.0 million.

8) A final dividend of 7.1 cents was declared bringing the full year dividend to 12.9 cents. This was a 69.7% increase year on year.

The increased top line of 16.1% to S$1.38 billion for 2018 was due to higher revenue from the Public Transport Services division. Specifically, SBS Transit commenced operations of the Seletar and Bukit Merah Bus Packages in the year. SBS Transit also saw higher ridership for the full year operations of Downtown Line 3. The transport services company also saw a 4% higher revenue from the Other Commercial Services division on the back of higher advertising revenue coming in at S$58.3 million for the year.

Outlook

Going forward, SBS Transit commented that revenue from its Bus services business is expected to grow, while revenue from its rail services will face headwinds. The Other Commercial Services segment is likely to remain stable. However, it also commented:

“Staff costs are expected to be higher following salary adjustments and increments to retain and attract staff. Repairs and maintenance costs are expected to increase with the higher fleet size, higher maintenance requirements for the aging bus fleet and the NEL/SPLRT fleet as well as continued investments in predictive maintenance capabilities to enhance service reliability. Overall, operating and maintenance costs will increase with the full year effect of the Seletar and Bukit Merah Bus Packages”

SBS Transit’s closing price on Tuesday’s was S$2.98, resulting in a price-to-earnings ratio of 11.6 and a dividend yield of 4.3%.

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Motley Fool Singapore writer, Esjay contributed to this article.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Esjay doesn’t own shares SBS Transit Ltd. Motley Fool Singapore director, David Kuo, does not own shares in SBS Transit. The Motley Fool Singapore has recommended SBS Transit.