Thursday, February 9, 2017

SBS Transit(S61)

Draft: 2/9/2017 (Market size: 717m, shares: 310m)
Updated: 2/10/2017 on BCM.

Based on 2016 FR.

EPS: 10.12c.
Dividend: 0.035/0.028(2016/2015)

First impression, similar to Vicom(V01), its staff costs is the most significant item, increased faster than revenue increase, helped by fuel saving of 40+m, OP improved by 16m.

2016'mil 2015'mil
Total assets  1055 1091
Liabilities 637 752
Equities 418 339

CFO:  64.9m / 1.7m (2016/2015)
EBITDA: 123m / 110m (2016/2015)


2016'000 2015'000
Disposal of vehicles and equipment  15,630 218,801
Purchase of vehicles (23,455) (155,801)
Net CAPEX (used) (7,825) 63,000
 Carrying value of Vehicles, premises and equipment: 866m /  904m (2016/2015)
It seems the depreciation is on average 10years(COE lifespan?)

Basically it means FCF: 40m+ on average, with yield of 1.5% , an average annual growth over 3-year period 7~8% (est.), the valuation today(2/9/2017 share price 2.3) is a bit too high.

2016 FR Auditor: Deloitte & Touche LLP.
(there is some big change in current/no-current liabilities numbers in the report, the explain is:
The decrease in non-current liabilities was due mainly to the reclassification of the second series of Medium-Term-Notes (MTN) maturing in September 2017 to current liabilities. vice versa)
Biz updates:
8mths of fare share model, 4 mths of Bus Contracting Model(BCM). 
Q1: Does that mean future purchase of new bus will be done by LTA?

Q2: What is BCM?
 A2: found on wikipedia. LTA will "own all bus assets like bus depots and fleet management systems".
It means that CAPEX will gradually be reduced, to be replaced by leasing price SBS Transit put fwd to LTA for getting awarded with various Bus packages.
Thus the valuation of SBS Transit is on what exactly SBS paid to authority(isn't this commercial secret highly guarded).
It is my guess that LTA will have a reserved price tag, leaving SBS some NP% on a vis-a-vis usual biz level, say 3~5% over its revenue.
An valuation can then be worked out backwards.

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