SMRT just released their 3rd quarter results and they say that their profitability will deteriorate due to higher operating costs.Staff costs for the Train and Bus operations are expected to significantly increase due to increased headcounts and market wage adjustments. Maintenance for train operations will increase due to enlarged train fleet and continuing to improve the reliability of the aging fleet and rail network.
Source: http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_49DF1DD28B2E1D4D48257B020034CA10/$file/results.pdf?openelement
I personally do not think it is a good choice to acquire any amount of SMRT shares due to their increased operational costs and their lack of visible growth plans or investments for the company. On top of the high operational costs, they are incurring more debts in order to pay dividends to their shareholders. Despite the rapid expansion of the MRT network in Singapore, these railway networks will likely incur costs to maintain. As reliability is the key to their operations, long term returns will not be sustainable, especially if they continue to pay dividends to the shareholders in the expense of debt.
*Disclaimer: I am not liable for any investment decision you make with regards to this post. Make your own investment decisions.
It is good to have most of these articles around to maintain the regular flow of information. Help people that no one could do it later, good work!
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Thanks for sharing. Maintenance reliability falls under the overall category of general reliability within the maintenance portion of the process.
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