atans1

SMRT: Can still wait

In Infrastructure on 05/05/2013 at 5:15 am

SMRT’s FY2013 profit missed expectations as cost inflation outpaced revenue growth. Margin pain will persist until SMRT moves to a more sustainable business model. Until then, not only are profits at risk, so are dividends.

Dividend payout was cut to 45 per cent versus its previous 60 per cent policy. FY2013 core net profit met only 92 per cent of our and consensus estimates. We cut our FY2014-15 EPS estimates by 21 to 27 per cent and introduce FY2016. Our target price (discounted cash flow, weighted average cost of capital 6.5 per cent) falls to $1.26. CIMB April 30.

The last target price I saw, six months ago I think, put it at 1.33. Not sure whose.

Buying for yield requires co to have a sustainable business model, something that SMRT admits it doesn’t have. Keep on watching.

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: