You are here

Broker's Take: SMRT could face S$50m fine for disruptions, says Maybank Kim Eng

Friday, July 10, 2015 - 09:31
3538592.jpg
SMRT could get slapped with a S$50 million fine for its recent July 7 service disruptions, said Maybank Kim Eng on Friday morning.

SMRT could get slapped with a S$50 million fine for its recent July 7 service disruptions, said Maybank Kim Eng on Friday morning.

Keeping its "hold" call on the transport operator, Maybank Kim Eng said: "We believe that the regulators could fine SMRT for the service disruptions. This poses downside to our FY3/16 net income forecast of S$119.4 million.

"Recall that Parliament passed a bill on Feb 17, 2014, that increased the maximum fine for every rail disruption to 10 per cent of an operator's annual fare revenue for the relevant rail line. This was up from the previous maximum of S$1 million. SMRT's FY3/15 rail revenue was S$644 million for its North-South, East-West, and Circle Line. This suggests a maximum fine of S$64.4 million for its entire rail network."

Still, as Tuesday's disruptions did not affect the Circle Line, the broker thinks that the maximum fine could be closer to S$50 million.

Maybank Kim Eng's target price for SMRT is S$1.57; the stock was last traded at S$1.485 per share at 9.15am.

Powered by GET.comGetCom