A tale of two operators: SMRT and ComfortDelGro traverse completely opposite routes

Singapore’s land transport is due for a shake-up.

It’s the best of times for ComfortDelGro, and it’s the worst of times for SMRT. On one hand, the latter is bombarded with a disheartening flurry of train disruptions, sometimes one after the other.

On the other hand, the former continues to exhibit stability, a trait which proves elusive in today’s market.

According to analysts from OCBC, SMRT has had quite a challenging year, being fined $5.4m for potentially the worst-ever train breakdown in Singapore’s history, while it saw its earnings erode by mounting expenses for preventive and corrective maintenance.

The numbers tell the story, as OCBC reveals that SMRT’s profit declined by 3.7% yoy to $45.9m, the aftermath of a full-year struggle with train losses on higher rail maintenance-related expenses.

“Looking ahead, as we expect further increase in rail maintenance-related expenses as a proportion rail revenue, and the need to increase headcount in preparation of Tuas West Extension, we think outlook is likely to remain muted for SMRT (aside from any RFF transition),” OCBC said.

In stark contrast, ComfortDelGro continues to exhibit stability, with profit rising by 6.3% to $233.7m, driven by its bus and taxi segments.

“With DTL2 due to start on 27 Dec, we see further upside on revenue but we think it takes time for ridership to mature. That said, with a diversified revenue base, we expect CDG to continue its stable growth in CY16,” OCBC said.

Meanwhile, OCBC said the appointment of new transport minister Khaw Boon Wan almost guarantees a shake-up for the sector.

“However, the uncertainties over the regulatory changes for the private carhire industry as well as the timeline of RFF transition continue to limit the visibility over the impact on both CDG and SMRT,” OCBC said.