SBS Transit

SBS Transit stages recovery

 

SBS Transit, Singapore’s dominant public transport operator stages recovery from the COVID-19 pandemic. The transport operator operates more than 3,400 buses and the rail system for Downtown line, North East line, Sengkang LRT and Punggol LRT.

Because of the lock-down measures during COVID-19, people have stopped going to work and even out of their houses. This means that there are no passengers for public transport companies like SBS Transit. In 2021, ridership for buses and trains remains low as nightlife remained on-existent and people continue to work at home.

Recently, the government announce that 75% of the workforce are allowed to go back to office to work. I believe that this is a piece of good news to transport operators like SBS Transit.

SBS Transit Rail Ridership

As you can see from the chart above, ridership was badly impacted in 2020 due to COVID-19. The rail ridership recovered slightly in 2021.

I am expecting ridership to further recover if there are no further sudden outbreaks for the rest of the year 2022.

SBS Transit FY2021 Financial Results

Let us take a look at the financial results to understand how bad SBS Transit was impacted in FY2020 and FY2021.

In FY2021, the revenue increased by 6.5% to $1.3 billion.

Excluding Government reliefs, full-year operating loss was registered for the second consecutive year at $2.8 million compared to $29.8 million previously.

Including Government reliefs of $56.3 million, the Group turned in an operating profit of $53.6 million, down 33% from the year before. This was partly due to a loss from the disposal of buses as well as a reduction in the Government relief package.

Net profit attributable to shareholders decreased by 34.6% to $51.6 million.

FY2021 (S$’000) FY2020 (S$’000) % Change
Revenue 1,310,842 1,230,947 6.5
Operating Profit 53,554 79,983 (33.0)
Net Profit Attributable to Shareholders 51,634 78,957 (34.6)
EBITDA 158,894 189,029 (15.9)
EPS (based on existing share capital) – cents 16.56 25.32 (34.6)

Current Dividend Yield

SBS has been constantly paying dividends over the years. Since ridership has been impacted in 2020, DPU has also significantly been reduced.

2017 2018 2019 2020 2021
DPU (cents) 7.60 12.9 13.05 6.30 8.20

As of 8th April 2022, SBS Transit is trading at S$2.96. Based on 2021 dividend payout of 8.20 cents, this translate to a current dividend yield of 2.77%.

Summary of SBS Transit Stages Recovery

I am writing this post because the thought of the relaxation of COVID-19 restrictions will greatly benefit SBS Transit.

Investors should also take note that the increase in fuel prices due to the Ukraine war with Russia will also increase SBS Transit’s operating costs. However, this cost can be easily passed on to the consumers.

You may ask me why I still keep SBS Transit in my wife’s stock portfolio since I have sold away ComfortDelgro?

My thinking is simple. I believe buses and trains are the bare minimal transport and even though fuel prices may increase, there is no way we could avoid taking buses or train to work or out of home. Unless we cycle?

In my opinion, SBS Transit is a long term dividend play. When ridership increases, DPU will increase as well.

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