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8 Key Highlights From SBS Transit Ltd’s Latest Earnings

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 Singapore’s North East Line (NEL), the Downtown Line (DTL), and the Sengkang and Punggol Light Rapid Transit (SPLRT).

SBS Transit announced its latest financial results for the first quarter ending 31 December 2019, yesterday. Let’s have a quick look at eight key highlights to see how it did.

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Financial highlights 

1) Revenue grew 6.9% year-on-year to S$350.8 million.

2) Total operating costs increased by 5.5% to S$324.5 million.

3) As a result, operating profit ticked-up 28.8% to S$25.4 million.

4) Profit attributable to shareholders followed suit, rising by 23.2%, from S$16.8 million to S$20.7 million.

5) Consequently, earnings per share improved from 5.39 cents to 6.63 cents, up 23%.

6) As of 31 March 2019, SBS Transit’s balance sheet had S$6.1 million in cash and bank balances, and S$94.5 million in total debt. This translates to a net debt position S$88.4 million. This was a step back sequentially from a net debt position of S$42.3 million as at 31 December 2018.

7) Operating cash flow, for the quarter came in at a negative S$39.4 million while capital expenditure stood at S$4.3 million. This resulted in SBS Transit’s free cash flow coming in at a negative S$43.7 million.

8) Net Asset Value (NAV) per share at the end of the quarter stood at S$1.64 up from S$1.60 sequentially.

Revenue from Public Transport Services of $334.4m for Q1 2019 was higher by 6.8% year-on-year. This was mainly due to higher fees earned from higher operated mileage from bus services and higher ridership and average fares from rail services.

Average daily ridership was up on-year across the board with, the DTL seeing the growth of 10.4% to 476,000 passenger trips, North-East Line growing by 3.2% to 603,000 passenger trips and Light Rail Transit (LRT) registering a 10.4% growth to 141,000 passenger trips. Revenue from Other Commercial Services also grew to register a 9.6% uptick to $16.3m for the quarter.

Outlook for SBS Transit

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 that:

“The rail business will continue to face challenges from operating and maintenance costs. Repairs and maintenance costs are expected to rise with the NEL/SPLRT fleet in its mid-life cycle.”

“With the full year operations for the Seletar and Bukit Merah Bus Packages, overall operating costs will increase. 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 investments in predictive maintenance capabilities to continuously enhance service reliability.”

SBS Transit’s closing share price on Monday was S$4.05, resulting in a price-to-earnings ratio of 15.75 and a dividend yield of 3.19%.

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Motley Fool Singapore writer Esjay contributed to this article. Esjay does not own shares in SBS Transit. The Motley Fool Singapore has recommended shares of SBS Transit. 

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Tim Phillips doesn’t own shares in any companies mentioned.