SMRT reported a 2.9% YoY growth in its 4QFY14 revenue to S$289.5m. PATMI of S$16.9m was a reversal from a net loss of S$11.9m in 4QFY13. Even if we exclude a one-off S$17.3m impairment of interest in an associate in 4QFY13, SMRT‟s 4QFY14 PATMI would still have grown by 215.2%. For FY14, revenue climbed 4.0% to S$1,163.9m, in line with our forecast of S$1,166.7m.
PATMI dipped 25.7% to S$61.9m but still exceeded our expectations by 11.9% due largely to higher-than-expected „other operating income‟. SMRT raked in an operating loss of S$25.0m in FY14 from its Fare business (FY13: operating profit of S$32.3m) but this was mitigated by a 12.4% growth in operating profit from its Non-Fare business to S$106.4m.
A final DPS of 1.2 S cents was declared, bringing FY14 dividends to 2.2 S cents/share. This was lower than the 2.5 S cents DPS paid out in FY13 but ahead of our 1.8 S cents/share forecast. Looking ahead, SMRT believes conditions for its Fare business will remain challenging, but expects impending changes to the rail financing and bus operating model which will address the sustainability of its Fare business in Singapore. We will seek more clarity on this during the analyst briefing, as we believe this issue has been the main reason driving its 20% share price surge over the past week.
Our Sell rating and S$1.06 fair value estimate comes under review.
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