Long-Term Investment: SMRT

Recommended Type: Long-term Investment
Sector:
Transport; Storage; Communications

Background Information:
SMRT Corporation Ltd ("SMRT Corp") is a holding company with transportation as its core business. SMRT Corp through its wholly-owned subsidiary, SMRT, operates the MRT system in Singapore. It also operates the Bukit Panjang light rapid transit system (Bukit Panjang LRT System), provides an executive bus service, a stored value farecard ticketing service and specialist engineering consultancy services.

TIBS, Singapore's second licensed public bus operator, became a wholly-owned subsidiary of SMRT Corp on 11 December 2001.

Today, SMRT is Singapore’s premier multi-modal transport operator. It remains the dominant player in the nation’s rail network and its buses and taxis have a significant presence in Singapore’s vibrant transport landscape.

SMRT also provides various Operations and Maintenance services to international transport owners. Major projects include:
Asia Pacific:
-Ho Chi Minh City Rail System, Asian Development Bank
-Bangkok Metro Company Ltd
-Bangkok Transit System
-Delhi Metro Rail Corporation
-Marubeni Corporation
-Nanjing Metro
-Shanghai Metro Company Ltd
-Taipei Rail Transit Corporation
Middle East:
-Sharjah Transport Authority
-Nakheel
Singapore:
-Sentosa Development Corporation
-Jurong Bird Park
South America:
-Maritima Petroleo Engenharia Ltd

Leaders:

Chairman: Choo Chiau Beng
-Chairman and Chief Executive Officer of Keppel Offshore & Marine Ltd
-Senior Executive Director of Keppel Corporation Limited
-Chairman of Singapore Petroleum Company Limited and Singapore Refining Company Private Limited
-Director of Keppel Land Limited, k1 Ventures Ltd and Singapore Maritime Foundation Limited
-Board member of the Maritime and Port Authority of Singapore
-Chairman of the Nanyang Business School’s International Advisory Board
-Chairman of Det Norske Veritas South East Asia Committee
-Board member of the American Bureau of Shipping
-Member of the American Bureau of Shipping’s Southeast Asia Regional
-Committee and Special Committee on Mobile Offshore Drilling Units
-Singapore’s Non-resident Ambassador to Brazil
-Conferred the Public Service Star Award (BBM) in August 2004


CEO: Saw Phaik Hwa
-Regional President for DFS Venture Singapore (Pte) Ltd, in charge of businesses in -Singapore, Indonesia and Malaysia
-Director of The Esplanade Co Ltd and a board member of the National Environment Agency of the Singapore Management University, the Tan Tock Seng Hospital Community Charity Fund and Youth Business Singapore.
-Resource panel member on the Government Parliamentary Committee (Transport)
-Conferred the Leading CEO Award in 2005, organised by the
-Singapore HR Institute and a Medal of Commendation at the 2007 May Day Award
-Attended an Advanced Management Programme at the University of Hawaii

Secretary: Prema d/o K Subramaniam

Data (as of 2008-03-31):
Current Ratio: 1.546
Closing Price (as of 2009-03-10): SGD 1.590
Debt to Equity Ratio: 0.369
Dividend Cover: 1.277
Dividend Per Share: SGD 0.078
Dividend Yield: 4.844%
Net Tangible Assets Per Share: SGD 0.419
Price Earnings Ratio: 16.162
Return On Equity: 22.143%
Return On Total Assets: 10.430%
Market Capitalization (as of 09-03-2009): $2.41072436514B
Net Profit: $0.1499B

Reasons to Buy:
a) Owes little debt
b) High dividend per share
c) High RoE
d) Management in favourable position
e) Possible greater share prices following more investors to fuel further growth
f) Shares less volatile due to high market capitalization
g) Current Financial Crisis could lead to more people switching to public transport and increased revenue and profits for SMRT, leading to increase in its share price
h) SMRT is government-funded, hence share prices will not dip as large as other private corporations would during this period of economic downturn
i) Leaders (Chairman and CEO) have good reputation and possess much experience in leading corporations and being in leadership and board roles in various major companies, hence being able to help company sign new contracts and take up various profitable projects
j) Projects spread worldwide ensures that corporation will reap profits and minimize losses during current economic downturn
k) RSI around average + Strong financial health = Possible profits in future from purchasing at current low prices

Sources:
www.sgx.com
www.cimbinvest.com
SMRT 2008 Annual Report

Done By:
Alvin Ong
Lee Zi Jian
Lester Mok
Irvin Ho