SBS Transit

[¯|_(ツ)_/¯]

SBS Mr Lim Jit Poh retired
https://links.sgx.com/FileOpen/SBS%20Tra...eID=653193

“I believe the time is right for me to hand over the reins to a new Chairman who will lead the Group through its next phase of growth. This is part of the renewal of the Board which began four years ago. The Board, as it stands now, is well balanced in terms of tenure, age and gender. The strength and expertise that is currently in place will be well placed to ensure that SBS Transit grows from strength to strength going forward,” said Mr Lim.

All the best, Mr Lim.

[BigFatWhale]

A look into 2 stocks to ride the recovery of the Public Transport sector that could see tailwinds ahead with the inflationary environment.

Click here for the Full Article:
https://thebigfatwhale.com/investing-in-...rnational/

[weijian]

I thought the answer at item (iv) is pretty interesting. That said, item (ii) does sound highly disturbing though.

MINUTES OF THE THIRTIETH ANNUAL GENERAL MEETING OF SBS TRANSIT LTD (“COMPANY”) HELD ON THURSDAY, 27 APRIL 2023 AT 10.00 A.M. VIA ELECTRONIC MEANS AND AT THE AUDITORIUM, SINGAPORE CHINESE CULTURAL CENTRE, 1 STRAITS BOULEVARD, SINGAPORE 018906

GCEO emphasized that the Company remain committed to safety, operational excellence, sustainability, staff development, and providing delightful commuting experiences to commuters, while striving to give its shareholders a fair and reasonable return

Responding to the shareholder’s question on what would be considered to be a fair and reasonable return, Chairman said that many factors have to be taken into account when considering this question, including the following:

(i) The Group’s business was in a regulated industry, where many factors, including fares were not within the Group’s control.
(ii) The operating environment was highly competitive and foreign public transport operators have demonstrated that they were prepared to bid very competitively with low margins, which translated to the Group having to accept low margins if it wanted to maintain its business.
(iii) The Group faced cost pressures from labour and energy costs.
(iv) Shareholders should naturally compare the Group’s returns with risk-free investments, e.g. mid-termed fixed deposits.
(v) As fares were regulated, the Group would advocate with the authorities for its returns to be comparable with such risk-free investments, so that with diligence, innovation and productivity, the Group could generate a reasonable premium over medium-term fixed deposit rate.

AGM 2022 MoM:
https://links.sgx.com/FileOpen/SBS%20Tra...eID=759699

[weijian]

In the last 4 years to FY24 end, SBS Transit's total depreciation was ~380mil while its CAPEX was ~80mil. I would assume the change in model from ownership (asset heavy) to operator (asset light) is the key here - as depreciation consistently sees a mid single digit CAGR reduction. The gap will probably stay or even get larger in the future as it "gives up" more and more of its bus concessions, regardless of whether it wins any of them.

Like VICOM, SBS Transit is probably also not the vehicle for any sorts of overseas expansion and capital allocation into international expansion is done via parent CDG. VICOM is currently undergoing its own CAPEX intensive periods and its CF statement looks the exact opposite of SBS Transit - annual depreciation is increasing and CAPEX is >> depreciation. Therefore for parent CDG to continue its international expansion, will it continue to look to SBS Transit to do its part?

VICOM had its golden period of giving high dividends in the mid to late 2010s as CDG was in the midst of the ride hailing wars. Looking at the huge ordinary dividend by SBS Transit, has its golden period of giving high dividends arrive?

SBS TRANSIT TURNS IN FULL-YEAR REVENUE OF $1.56 BILLION FOR 2024

• Full-year Group revenue increased by 2.1% to $1.56 billion.
• Full-year operating costs increased by 2.5% to $1.49 billion.
• Full-year operating profit decreased by 4.5% or $3.49 million to $73.17 million.
• Net profit attributable to shareholders increased by 1.8% to $70.3 million.
• A final tax-exempt one-tier dividend of 14.69 cents per share and a special tax-exempt one-tier dividend of 8.41 cents per share have been recommended.

https://links.sgx.com/FileOpen/SBST_Full...eID=834199

[Shrivathsa]

Good call Weijian,

If i remember what you correctly, instead of parent company find the child companies who have to pay out dividend to fund parent cos' expansion plans.

Played out exactly as per that.

https://links.sgx.com/1.0.0/corporate-an...ac2b9eef71

An eye popping 253% payout ratio.

I was hoping for a modest 7% yield as this is not exactly a huge growth business.

Full-year Group revenue decreased by 2.7% to $1.52 billion.
• Full-year operating costs decreased by 2.5% to $1.45 billion.
• Full-year operating profit decreased by 6.9% or $5 million to $68.1 million.
• Net profit attributable to shareholders decreased by 13% to $61.2 million.
• A final tax-exempt one-tier dividend of 8.66 cents per share and a special tax
exempt one-tier dividend of 31.99 cents per share have been recommended.

At closing price of 3.44 that is almost a 13% return. Guess the share price will jump by about 40 cents tomorrow.

[weijian]

I haven't look into SBS Transit's BS in detail but from the reply in the AGM, I suppose OPMIs can look forward to continued declaration of special dividends, although it may not be as much as FY25, for a period of time before it fully reverts to the mean.

MINUTES OF THE THIRTY-THIRD ANNUAL GENERAL MEETING

Question on the level of cash which should be retained by the Company

Chairman explained that the Company sought to distribute cash surplus to its capital and funding requirements, taking into account the scale of its operations, the need to ensure financial resilience in unforeseen circumstances, and the Group entities’ obligations to maintain adequate capital levels under its existing service contracts and rail licences, as well as potential contracts under tender or potential increases in service requirements from LTA. Accordingly, while some portion of the cash retained could potentially be distributed, the timing and amount of any further distribution require regulatory consultation to ensure that the Company was considered financially sound by its regulator.

https://links.sgx.com/FileOpen/SBS%20Tra...eID=888710