5 reasons why ComfortDelGro's bus and rail earnings dropped 41%
SBS Transit disappoints in 3Q12.
According to Barclays, SBS Transit, a 75%-owned subsidiary of ComfortDelgro (CD SP), released its 3Q12 results after the market close on 9 Nov.
Here's more from Barclays:
3Q earnings were -41% y/y, mainly due to 1) lower average fare on buses and trains driven by easier access to the MRT and dilution from the Northeast Line to other lines with the improved connectivity of the MRT network, 2) higher depreciation charge & maintenance expenses from the renewal and expansion of the fleet, 3) higher staff costs, 4) increased finance costs and 5) the start-up costs relating to the Downtown Line.
We expect most of the headwinds to remain in 4Q12 and do not expect the 4Q12 earnings to recover strongly y/y. Having said that, we expect the bus & rail operation in Singapore to contribute approximately 15% only to ComfortDelgro’s 2012 operating profit.
Another 68%-owned listed subsidiary - VICOM (Not Rated), mainly engaged in vehicle inspection, also reported 3Q12 results after the market close on 8 Nov, which was +3% y/y, due to increased business volumes. We expect the unit to contribute 8% of ComfortDelgro’s 2012 operating profit.
ComfortDelgro is slated to report its 3Q12 earnings after the market on 12 Nov.