SMRT's 2013 full-year profit pegged to hit just $110.3m

Consensus expectation is $121m.

According to Nomura, SMRT expects to report a net loss in 4QFY13F due to deteriorating profitability and a S$17mn goodwill impairment of its associate, Shenzhen ZONA Transportation Group.

The firm said that they have not built in the impairment loss in their numbers, due to the subjectivity of impairment which is largely at the discretion of management. 

Nonetheless, Nomura believes that the business should remain profitable in 4QFY13 if it strips out the impairment, though the profit warning hints at a much weaker 4QFY13 operating performance than expected by consensus.

Here's more from Nomura:

We note that 9MFY13 net profit was S$95.2mn and 4QFY13F is flagged as a quarter of loss. Consensus is expecting S$121mn, which means that the street is off the mark by at least 20%.

The number also implies that street was expecting a 4QFY13F profit of S$25.8mn, which appears to be too bullish now. We are expecting S$110.3mn for FY13F and a 4QFY13 profit of S$15.1mn, though we will need to revise that downwards for the impairment.

Dividends are at risk due to lower reported profits. The question remains as to whether the company will pay out dividends based on the normalised profit or the actual reported profit.

Separately, dividends are also at risk due to a potentially lower payout ratio, as we believe that the group needs to conserve cash for future capex.

Hence, even if normalised profits are used as the basis for dividend payment, it also remains to be seen whether the payout will be in line with historical experience.

The group has a stated payout ratio of 60%, though they have historically paid above that.