What Investors Should Know About SBS Transit Ltd’s Latest Earnings
- Original Post from The Motley Fool Sg

Yesterday, SBS Transit Ltd (SGX: S61) announced its financial results for the first quarter ended 31 March 2018. Here are 10 things investors should know from the earnings announcement:
1. Revenue for the 2018 first-quarter soared 15.8% to S$328.2 million.
2. SBS Transit said that revenue from Public Transport Services (consisting of bus and rail operations) improved by 16.3% year-on-year to S$313.3 million. The rise was mostly due to higher fees earned under the Bus Contracting Model with higher operated mileage, higher ridership from rail services with the commencement of Downtown Line (DTL) 3 from the end of October 2017, and higher other operating income. This was offset partially by lower average rail fare due to the fare reduction since the tail-end of last year.
3. Other operating income rose mainly on the back of “one-off recovery of Seletar pre-operation costs and income from the provision of shuttle services”.
4. The average daily ridership for all the rail networks operated by the firm grew year-on-year, with the most significant growth coming from the DTL. The average daily ridership for the line ballooned by 75.8% to 431,000 passenger trips due to the opening of DTL 3.
5. The commencement of DTL 3 also helped improved revenue from Other Commercial Services (SBS Transit’s rental and advertising businesses), which rose 6.6% to S$14.9 million. Revenue from this segment went up mainly due to higher advertising revenue from the newest line.
6. Net profit attributable to shareholders surged 63.7% to S$16.8 million. Consequently, diluted earnings per share (EPS) for the quarter rose to 5.38 Singapore cents, up from 3.30 cents a year ago.
7. Net profit margin improved from 3.6% last year to 5.1% in the latest quarter.
8. The balance sheet carried S$6.0 million in cash and bank balances, and S$197.0 million in total debt, as of 31 March 2018. This translates to a net debt position S$191.0 million, a decline as compared to the end of last year (S$5.3 million in cash hoard and total borrowings of S$181.0 million, giving a net cash position of S$175.7 million).
9. Operating cash flow improved for the quarter, which came in at a negative S$37.6 million as compared to a negative S$51.6 million last year. With capital expenditure decreasing from S$7.8 million last year to S$4.2 million in the latest quarter, SBS Transit’s free cash flow improved from a negative S$59.3 million to a negative S$41.8 million.
10. In its outlook statement, the land transport outfit said that revenue from the Public Transport Services is expected to be higher while revenue from Other Commercial Services is likely to be maintained. Of the Public Transport Services revenue, bus service revenue should grow due to the commencement of the Seletar bus package from 11 March 2018. The Bukit Merah bus package, which SBS Transit won in February this year, which will start operations in the fourth quarter of 2018. As for the rail services, revenue is expected to grow due to a full-year revenue contribution from DTL 3. However, the fare reduction, with effect from December 2017, could partially offset the higher revenue from DTL 3. SBS Transit also added that operating costs would rise due to higher staff costs.
At yesterday’s closing price of S$2.58, SBS Transit is going at close to 15 times its trailing earnings and has a trailing dividend yield of 2.9%.
$SBS Transit(S61.SI)

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The Better Buy: VICOM Limited or SBS Transit Ltd?
- Original Post from The Motley Fool Sg

Both VICOM Limited (SGX: V01) and SBS Transit Ltd (SGX: S61) are substantially owned by one of the world’s largest land transport company, ComfortDelGro Corporation Ltd (SGX: C52). As of 5 March 2018, ComfortDelGro had a 67.1% stake in VICOM and a 74.6% stake in SBS Transit.


Even though both VICOM and SBS Transit are involved in different business, I decided to see which company might give investors a better bang for the buck since they are both linked to the same parent.


Introduction of the Two Firms


VICOM provides technical testing and inspection services mainly in Singapore, while SBS Transit provides bus and rail services solely in Singapore. Under SBS Transit’s rail services business, the company operates the North East Line, the Downtown Line, and the Sengkang and Punggol Light Rapid Transit.


The table below shows the market capitalisation and revenue for the two firms. Market capitalisation is as of the closing share prices on 4 October 2018.


Do note that all figures quoted in the tables that follow are for the full year ended 31 December 2017 (FY2017) for both companies, unless otherwise stated.Source: SGX StockFacts and company annual reports


Round 1: Profitability


In this first round, I will look at the profitability of the companies in terms of net profit margin andreturn on equity(ROE). The ROE figure reveals how efficient a company’s management is in turning every dollar of shareholders’ capital into net profit.Source: Company annual reports


For every dollar of revenue created by VICOM, around 27 cents were generated as earnings, but for SBS Transit, every dollar of revenue only gave four cents in profit. VICOM also has a higher ROE than SBS Transit.


Winner: VICOM.


Round 2: Growth


In this second round, I will compare the compounded annual growth rate (CAGR) of revenue, net profit and dividend of the two firms for the past five financial years. Companies that can grow their sales and profits steadily over time should also see their share price rise.Source: Company annual reports and author’s calculation


SBS Transit has trounced VICOM in all aspects. SBS Transit’s business has improved substantially after transiting to the Bus Contracting Model (BCM). To learn more about the BCM, you can check out the article written by my colleague, Chin Hui Leong, here.


Winner: SBS Transit.


Round 3: Valuation


As investors, it is essential to focus on the value of the business and not on the daily changes in the stock price.


We will now compare the price-to-earnings (PE) ratio, price-to-sales (PS) ratio and dividend yield of the two companies. The values below are as of the closing prices on 4 October 2018.Source: SGX StockFacts and author’s calculation


SBS Transit has a lower PE and PS ratio than VICOM. However, VICOM has a higher dividend yield than SBS Transit. Overall, though, SBS Transit triumphs over VICOM with its better valuation.


Winner: SBS Transit.


The Foolish Bottom Line


The final score is 2-1 to SBS Transit, as it has triumphed over VICOM in two out of the three rounds.


However, we have yet to look at other important aspects of SBS Transit, such as its balance sheet strength, ability to generate free cash flow, future growth prospects, and so on. Potential investors interested in SBS Transit should conduct more in-depth research before investing their money. This quick comparison serves as a useful starting point and helps take some heavy-lifting off an investor’s back.


$SBS Transit(S61.SI) $ComfortDelGro(C52.SI) $SBS Transit(S61.SI) $VICOM(V01.SI)

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These 3 Companies Raised Their Dividends In The Last Quarter
- Original Post from The Motley Fool Sg

In a previous article here, we looked at three companies part of the Straits Times Index (SGX: ^STI) that have increased their dividends in the latest quarter. In this article, let’s look at three companies outside of the index which have rewarded shareholders with higher dividends.


Nordic Group Ltd (SGX: MR7)


Nordic is a supplier of services such as automation system integration solutions, vessel maintenance, repair and overhaul, and scaffolding and insulation, among others. The company mainly serves the marine, offshore oil and gas, petrochemical, pharmaceutical, infrastructure and public environment sectors.


For the second quarter ended 30 June 2018, Nordic saw its revenue rising 8% year-on-year to S$26.1 million with its net profit growing 17% to S$4.4 million. The top line growth was largely due to higher revenue from its Others segment from the sale of carbon allowances. The increase was offset by a fall in Project and Maintenance services revenues.


On a half-year basis, revenue increased by 11% to S$48.8 million while net profit climbed 19% to S$7.8 million.


Due to the higher profit for the first half of 2018, Nordic raised its interim dividend by 19% to 0.779 Singapore cent per share. A year ago, it paid out 0.653 cent. Nordic maintained its dividend payout ratio of 40% for both the dividend payments.


At Nordic’s share price of S$0.46 yesterday, it had a trailing price-to-earnings (PE) ratio of 11 and a trailing dividend yield of 3.6%.


SBS Transit Ltd (SGX: S61)


SBS Transit is a provider of bus and rail services in Singapore. Under the rail services business, the company operates the North East Line (NEL), the Downtown Line (DTL), and the Sengkang and Punggol Light Rapid Transit (SPLRT). As of 5 March 2018, ComfortDelGro Corporation Limited (SGX: C52), one of the largest land transport companies in the world, had a 74.6% stake in SBS Transit.


Revenue for SBS Transit’s 2018 second-quarter went north by 19.8% year-on-year to S$344.9 million. The growth was due to higher revenue from both its Public Transport Services segment and Other Commercial Services segment. Meanwhile, net profit surged 52.9% to S$19.4 million.


SBS Transit upped its interim dividend by around 60% to 5.80 Singapore cents per share. Last year, it dished out 3.65 cents.


SBS Transit shares ended Monday at S$2.60 apiece. The price translates to a trailing PE ratio of 13 and a trailing dividend yield of 3.8%.


VICOM Limited (SGX: V01)


VICOM provides technical testing and inspection services mainly in Singapore. It is also largely owned by ComfortDelGro. The land transport giant held 67.1% of VICOM, as of 5 March 2018.


Due to higher business volumes, VICOM’s top line for the second quarter inched up by 2.4% year-on-year to S$24.7 million. Net profit tracked up as well, growing 2.9% from S$6.1 million to S$6.2 million.


An interim dividend of 13.46 Singapore cents per share was declared, a 2.6% increase from 13.12 cents dished out last year.


At yesterday’s closing price of S$6.10, VICOM had a trailing PE ratio of 20 and a trailing dividend yield of 6.0%.


$Nordic(MR7.SI) $SBS Transit(S61.SI) $VICOM(V01.SI)

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SBS Transit Ltd’s 2018 Second-Quarter Earnings: Interim Dividend Hiked By Around 60%
- Original Post from The Motley Fool Sg

SBS Transit Ltd (SGX: S61) provides bus and rail services in Singapore. 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).
On Wednesday (8 August), the company announced its financial results for the three months ended 30 June 2018.
Financial highlights
Revenue for the quarter grew 19.8% year-on-year to S$344.9 million. The company said that revenue from the Public Transport Services segment (consisting of its bus and rail operations) improved by 20.3% year-on-year to S$330.1 million.
The increase was primarily due to higher fees from higher operated mileage following the commencement of the Seletar bus package in March this year. Higher rail ridership with the launch of Downtown Line (DTL) 3 in October 2017 also contributed to the top line. The positive factors were offset partially by lower average rail fares due to a fare reduction that started in December 2017.
Despite rail ridership growth in all the lines it operates in, SBS Transit’s rail operations still made a loss in 2018’s second-quarter. The company’s fare revenue was not enough to cover increasing operating and maintenance costs.
The Other Commercial Services segment (comprising SBS Transit’s rental and advertising businesses) saw revenue growth of 10.7% to S$14.8 million due to higher advertising revenue from the commencement of DTL 3. As a result, operating profit went up by 10.9% to S$9.9 million.
Net profit attributable to shareholders surged 52.9% to S$19.4 million. Consequently, earnings per share (EPS) for the quarter rose 52.6% from 4.09 cents to 6.24 cents.
As of 30 June 2018, the balance sheet had S$6.5 million in cash and bank balances, and S$156.5 million in total debt. This translates to a net debt position S$150.0 million, an improvement compared to both 2018’s first-quarter and 2017’s second-quarter.
Quarterly operating cash flow jumped 58.8% from S$35.8 million a year ago to S$56.9 million. With capital expenditure increasing slightly from S$3.2 million to S$4.2 million, SBS Transit’s free cash flow jumped by 61.5% from S$32.6 million to S$52.7 million.
An interim dividend of 5.80 Singapore cents per share was declared, up by 58.9% from 3.65 Singapore cents per share a year ago.
Outlook
Going forward, SBS Transit said that revenue from its Public Transport Services business is expected to increase, while revenue from the Other Commercial Services segment is likely to be maintained. However, it also mentioned:
“Operating costs will be higher with higher staff costs following salary adjustments and increments. Repairs and maintenance costs are expected to increase with DTL fully operational and higher maintenance requirements as the bus and train fleets age. Premises costs are also expected to be higher with the addition of Seletar and Ulu Pandan Depots.”
At Wednesday’s closing price of S$2.53, SBS Transit is selling at 13 times trailing earnings and has a trailing dividend yield of 3.9%.
$SBS Transit(S61.SI) $Second Chance(528.SI) $SBS Transit(S61.SI)

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1 Simple Number To Understand 3 Important Areas Of ComfortDelGro Corporation Limited
- Original Post from The Motley Fool Sg

ComfortDelgro Corporation Limited (SGX: C52) is a transport company with operations mainly in Singapore, Australia, the United Kingdom, and China. It is also the majority owner of vehicle and non-vehicle testing and inspection outfit Vicom Limited (SGX: V01) and bus and rail services operator SBS Transit Ltd (SGX: S61).
In this article, I want to dig deep into Comfortdelgro’s return on equity, or ROE.
The choice of ROE
Why the ROE some of you might be asking? That’s because the financial metric gives investors important insight on a company’s ability to generate a profit using the shareholders’ capital it has.
A ROE of 20% means that a company generates $0.20 in profit for every dollar of shareholders’ capital. In general, the higher the ROE, the more profitable a company is. A high ROE can also be a sign that a company has a high quality business.
That being said, it’s worth noting that the use of high leverage – which increases the financial risk faced by a company – can also increase a company’s ROE. So, that’s something to observe.
Calculating the ROE
The ROE can be calculated commonly using the following formula:
ROE = Net Profit / Shareholder’s Equity
But, the ROE can also be calculated using a different approach shown below:
ROE = Asset Turnover x Net Profit Margin x Leverage Ratio
Doing so will reveal three important aspects about a company: How well it is managing its assets, how efficient it is at turning revenue into profit, and how much financial risk it could be taking on. For more information about this formula, you can check out here.
With that, let’s turn our attention to the ROE of Comfortdelgro.
The actual numbers
The asset turnover measures the efficiency of a company in using its assets to generate revenue. It is calculated by dividing a company’s total revenue by its assets.
For Comfortdelgro, it had a total revenue of S$3.97 billion and total assets of S$4.83 billion for its fiscal year ended 31 December 2017 (FY2017). This gives an asset turnover of 0.82.
The net profit margin measures the percentage of revenue that is left as a profit after deduction of all expenses. In FY2017, Comfortdelgro had a net profit margin of 8.8%, given its net profit of S$348.9 million and revenue of S$3.97 billion.
Lastly, we have the leverage ratio, which shows the relationship of a company’s total assets to its equity. It is calculated by dividing total assets by equity. A higher ratio means that a company is funding its assets with more liabilities, hence resulting in higher risk.
In FY2017, Comfortdelgro had total assets and total equity of S$4.83 billion and S$3.04 billion respectively. This gives a leverage ratio of 1.59.
When we put all the numbers together, we arrive at an ROE of 11.5%.
$ComfortDelGro(C52.SI) $SBS Transit(S61.SI) $VICOM(V01.SI)

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What I Learnt From SBS Transit Ltd’s 2017 Annual General Meeting
- Original Post from The Motley Fool Sg

On the morning of 25 April 2018, SBS Transit Ltd (SGX: S61) held its annual general meeting (AGM) for 2017. As a shareholder, I attended the AGM to gain more insights into the business.
The following is what I learnt from the presentation on SBS Transit’s financial results for 2017 by Tan Poh Choo, Evelyn, who is the company’s Senior Vice President (Finance).
The company’s key milestones for 2017 included: (1) A full-year’s contribution from the Bus Contracting Model (BCM) contracts, compared to just four-months in 2016; (2) winning the Seletar bus package; and (3) the commencement of revenues from Downtown Line Stage 3 (DTL3) on 21 October 2017. With DTL3, SBS Transit’s rail business covers a total rail-distance of 82km, representing a market share of 36%.
In 2017, SBS Transit’s revenue increased by 8.5% to S$1.19 billion due to higher revenue from its Public Transport Services segment which more than offset lower revenue from the Other Commercial Services segment.
The Public Transport Services segment saw improvements primarily due to the full-year revenue contribution from the BCM contracts, and higher ridership from rail services with the opening of DTL3 in October 2017. Revenue from the Other Commercial Services segment declined by 12.4% to S$56 million because of lower advertising and rental income from the loss of the Bulim and Loyang bus packages.
SBS Transit’s operating costs increased by 7.1% from S$1.06 billion in 2016 to S$1.13 billion in 2017, mainly due to higher staff costs, and repairs and maintenance expenses. Staff costs grew because the company needed to increase its headcount in preparation for DTL3, while repairs and maintenance costs increased due to higher maintenance required from the company’s aged transport fleet.
Operating profit increased by 42.1% to S$59.3 million, while net profit grew 50.3% to S$47.1 million. The company’s operating profit margin increased from 3.8% in 2016 to 5% in 2017, and its return on equity climbed from 8.3% to 10.9%. Earnings per share jumped by nearly 50% from 10.12 Singapore cents to 15.17 Singapore cents, in line with the net profit growth. SBS Transit’s total dividend per share (which was approved by shareholders later during the AGM), was raised from 5.05 Singapore cents in 2016 to 7.60 Singapore cents in 2017.
Before the BCM came into play, SBS Transit had to incur significant capital expenditure (capex) to acquire buses. With the BCM, the LTA is the one having to buy the buses. Therefore, capex for SBS Transit has fallen significantly. For example, at the peak in 2014, SBS Transit’s capex was S$214.4 million and its gearing ratio (total debt over equity) was 155.6%. In 2017, these have improved considerably to S$35 million and 40.3% respectively.
In 2018, SBS Transit said it would focus on:
1) The Seletar bus package, which started on 11 March (with the Selatar package, SBS Transit now has a market share of 62% of Singapore’s bus network);
2) The New Rail Financing Framework (NRFF) for the North East Line and the Sengkang and Punggol Light Rapid Transit which commenced on 1 April 2018 (you can learn more about the NRFF here); and
3) The commencement of the Bukit Merah bus package from 18 November 2018.
My Foolish takeaway
It was a stellar 2017 for SBS Transit. It will be interesting to watch how 2018 pans out for the company with the transition of the rail business to the NRFF, a full-year contribution from DTL3, and the second whole year where the bus operations will be under the BCM.
$SBS Transit(S61.SI)

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