SBS Transit attributed the 9.2% growth in its public transport business revenue mainly to the contribution from bus services, with the transition to the bus GCM and higher ridership from rail services. The 3.9% y-o-y growth in the North East Line’s ridership and 19% y-o-y growth in the Downtown Line’s ridership offset lower average rail fare that stemmed from the fare reduction that took effect on Dec 30 2016.
RHB had earlier estimated the improvement in EBIT margin for Singapore’s bus operations under the GCM, which was implemented in Sept 2016. While it is difficult to decipher the magnitude of improvement in ComfortDelGro’s bus margins under the GCM – since SBS Transit has stopped reporting the earnings split between bus and rail businesses from 4Q16 – its overall EBIT margin increased q-o-q for the second straight quarter in 1Q17. While improved rail ridership may have played a role as well, we maintain that much of the improvement should have come from the transition of Singapore’s bus operations to the GCM.
Shares of ComfortDelGro closed 4 cents lower at $2.68.
