SINGAPORE (Dec 4): Daiwa is maintaining its “underperform” call on SMRT Corp with a 12-month target price of $1.31 after comments made by Transport Minister Khaw Boon Wan in a Straits Times article appear to have fuelled talk of a potential nationalisation of the Singapore rail network or acquisition of the rail assets in the near term.

In a Friday report, analyst Jame Osman says: “The biggest upside risk to our thesis remains a potential near-term acquisition of SMRT’s rail assets, as this would likely substantially improve its free cash flow profile. However, we argue that it would be in the best interests of both the government and the Singapore public if SMRT were to fulfil all existing obligations with respect to network efficacy, before addressing any issue of asset acquisition.”

Further, given that the government already owns rail infrastructure, Osman thinks a transition to a new rail model is unlikely to alter the complexion of SMRT’s rail business positively, from an operational standpoint.

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)

Related Stories

Stay updated with Singapore corporate news stories for FREE

Follow our Telegram | Facebook