Here’s why other transport firms will face hard times once SMRT is privatised

SMRT is sacrificing near-term profitability to enhance capabilities.

The transition to the new rail financing model is giving SMRT more than it can handle, as majority shareholder Temasek makes moves to delist the company and focus on enhancing its capabilities.

However, according to a report by Maybank Kim Eng, the privatisation could have negative implications for other transport companies.

This is because a privately-held SMRT could take a longer term view when investing, leaning on sacrificing near-term profitability.

‘Therefore, for ComfortDelGro to compete effectively, more investments to enhance its capabilities and workforce may be needed. This could lead to higher operating expenses and could weigh on near-term profits,” Maybank Kim Eng said.

Additionally, Maybank Kim Eng added that SMRT could bid more aggressively to drive scale in subsequent tenders to operate other rail lines.