The five-year contract will commence next June, with an option for LTA to extend the term by a further 2 to 5 years.
This package comprises 26 bus routes and SMRT put in the winning bid of $600 million, around 5% below SBS Transit’s lowest bid.
Under this contract, SMRT will operate from the new Kim Chuan Bus Depot and manage Eunos Bus Interchange, Serangoon Bus Interchange, Woodleigh Bus Interchange, and Sims Place Bus Terminal.
According to LTA, SMRT secured the contract by offering cost savings relative to the current contract while demonstrating strong capabilities in electric bus operations and maintenance.
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SMRT's proposal also included comprehensive plans for workforce development and capability building.
Chee notes that with the loss of the Serangoon-Eunos Bus Package, SBS Transit now operates 6 of Singapore's 14 bus packages, which gives it a 43% market share, compared to 4 packages for SMRT and 2 packages each for Go-Ahead and Tower Transit, which translates into market shares of 29% and 14% respectively.
By assuming the current contract value is broadly in line with SBS Transit's tender bid of $630 million over 5 years, and applying a typical 4% net margin, Chee estimates an annual earnings impact of around $5 million for SBS Transit.
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On a prorated basis, this translates to an estimated FY2027 earnings impact of $2 million at the ComfortDelGro level, which is an "immaterial" 1% of its total earnings.
"Nonetheless, with only 2 of its 6 bus packages secured via competitive tenders, SBS Transit remains exposed to further package losses as its remaining 4 packages, previously awarded under negotiated contracts, are progressively put up for tender in the coming year," says Chee.
"SMRT's latest aggressive bid reinforces this risk," he adds.
ComfortDelGro shares as at 3.20 pm was unchanged at $1.34, but down 10.14% year to date.
SBS Transit was down 1.08% to trade at $3.65. Year to date, it is up 14.06%.
