OCBC Report 10 Oct 13

SMRT Corporation: Laying low Since end-Aug, SMRT’s share price has stabilised between a tight band of 1.29-1.30, which has helped to arrest its slide of 10% following its 1Q14 results. The lower frequency of bad publicity has definitely aided the company, and we believe that the street has already factored in the majority of the negative expectations for FY14 as well as concerns over capex requirements. Assuming no asset impairments for its loss-making bus business, we should expect its share price to remain stable after the release of its 2Q14 results (likely to remain weak) at the end of the month. As such, we upgrade SMRT to HOLD on valuation grounds with an unchanged fair value estimate of S$1.30. (Lim Siyi)

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