SMRT to invest S$300mln for fleet expansion in 2012

The acquisition of 17 new trains is part of the huge capex the transportation services company will undertake next year.

SMRT also plans to shell out S$200mln for buses and taxis and an additional S$100mln for the acquisition of Dover and Changi stations.

The jump in SMRT’s capex spending for FY12 is seen to rise to S$600mln from its usual S$100-150mln range due to the planned investments.

In a statement, OCBC Research said the company will most likely have to seek funding and loans for at least S$200mln to support its capex plan.

The expansion is coming at the heels of SMRT's higher ridership revenue for FY11. Revenue grew 8.3% YoY to S$969.7mln, albeit at lower average fares due to the implementation of distance fares.

Taxi rental revenue and rental and advertising revenue jumped 4.3% and 13% YoY, respectively.

The company's operating profit, however, fell by 0.8% YoY to S$195.6mln due to higher staff costs from increased hirings related to the Circle Line (CL) and higher energy costs due to the increase in wholesale electricity and diesel prices.

Net profit was marginally lower, down 1.1% YoY to S$161.1mln.

While SMRT expects the lower average fares from the implementation of distance fares to continue negatively impacting its revenue in 1Q12, OCBC Research foresees a pickup in rental and advertising revenue to offset the decrease.

The 2,300 sqm Orchard Xchange, which is expected to be open for business in 2Q12, and the retail operations in seven stations-- including Botanic Gardens and Marina Bay-- currently under renovation are also seen to shore up SMRT's revenue for FY12.