Brokers' take

SMRT Corporation | Hold

July 9 close: S$1.485

Target price: S$1.59

DBS Group Research, July 9

We expect the occurrence of the latest train disruption, which appears to be the most major one since December 2011, to pose downside risks to our cost assumptions. This undermines our earlier thesis of a strong earnings recovery on the back of stable cost structure, fare increases and longer-term potential of rail reforms. We therefore downgrade our recommendation to "Hold".

This latest disruption which lasted about 31/2 hours in the evening of July 7, 2015, bears a stark resemblance to the first breakdown that occurred back in December 2011. Though peppered with minor disruptions since then, this occurrence seems to be the most major one since December 2011, given that it involved both the North-South and the East-West lines simultaneously and affected about 250,000 commuters. Unfortunately, this will cast unwanted a…