SMRT can’t celebrate just yet despite earnings jump: analysts

The firm can’t quite escape its rail woes.

The earnings jump from the public transport firm may be a pleasant surprise, but analysts say it’s definitely not yet the time to celebrate as rail headwinds continue to loom in SMRT’s horizon.

According to analysts from Maybank Kim Eng, benefits from its lower energy bills will be nullified by a 1.9% fare cut that took place last month, while the recent opening of the Downtown Line Stage 2, operated by SBS Transit, should also eat up some traffic from its network.

Meanwhile, Maybank Kim Eng adds talks on bus and rail transitions remain hazy.

“However, we expect better clarity on the bus contracting terms in the coming months as the new operating model will take place from September this year,” Maybank Kim Eng said.

However, according to RHB Research, SMRT has actually been making progress on its Rail Financing discussions.

“SMRT has made some progress in its discussions with LTA on the transition to a new rail financing framework (RFF),” RHB Research said.