SMRT shares hit one-week low
SINGAPORE, April 25 — Shares of Singapore's main subway operator SMRT Corp Ltd fell to a one-week low after it said it would spend S$900 million (RM2.2 billion) on renewal and preventive maintenance to address problems that have led to numerous train breakdowns in recent months.
SMRT shares were 2.8 per cent lower at S$1.76, with over 1 million shares changing hands in early trading, half of its average daily volume over the last five sessions.
Deutsche Bank downgraded SMRT to hold from buy and cut its target price to S$1.75 from S$2.00, saying it has turned more cautious given the company's near-term operational and regulatory risks. SMRT also faced uncertainty surrounding the succession of its chief executive, it added.
The broker expects a significant proportion of SMRT's renewal costs to be incurred within the next five years, and raised its capital expenditure estimates for 2013-2017 by 50 percent.
Citigroup also said there may be downside risks to its fourth quarter net profit forecast for SMRT of S$39 million.
"The outlook beyond looks increasingly pessimistic given the significant expenditures ahead," it said. — Reuters