CGS-CIMB Research analysts Ong Khang Chuen and Darren Ong are maintaining their ‘add’ call for SBS Transit with an unchanged target price of $3.60 after Minister of Transport Ong Ye Kung said that the government will review the financing framework for the Downtown Line (DTL).

In a March 5 research note, the analysts highlighted that under the current framework, SBS pays a fixed license fee to operate the DTL and bears fare revenue risk which is dependent on ridership.

The DTL has been incurring losses since before Covid-19, as revenues generated from ridership have not been sufficient to cover operating expenses. Losses were exacerbated in 2020 after the pandemic, and the analysts believe that the shift to more flexible work arrangements will likely keep ridership levels low.

To continue reading,

Sign in to access this Premium article.

Subscription entitlements:

Less than $9 per month
3 Simultaneous logins across all devices
Unlimited access to latest and premium articles
Bonus unlimited access to online articles and virtual newspaper on The Edge Malaysia (single login)

Stay updated with Singapore corporate news stories for FREE

Follow our Telegram | Facebook