No SMRT fare hike today, big one in 2014?

SMRT fares will likely stay level till 2013 but prepare for an immediate rate spike, said PhillipCapital.

Aside from the looming fare hikes which are expected to be allowed, SMRT is also predicted to move to a new rail financing network soon or risk a "major drag on future cash flows."

Here's more from PhillipCapital:

Singapore’s Transport Minister updated on plans for the public transport system during the Ministry’s Committee of Supply (COS) debate. The key implication for SMRT is that there would be no fare revisions for 2012, implying that public transport fares for 2013 would be kept unchanged from current levels. Rail capacity would expand with more trains to be gradually injected into the system. Bus capacity
would increase with the government retrieving its share of fare revenue from the 550 buses paid for by them.

We reviewed our earnings forecasts to account for unchanged fares in 2013 (previous: +2.3%), but lifted fare adjustments in 2014 to 4.1% (2.3%+1.8%= 4.1%). Our fare adjustment for 2014 is on the premise that a substantial fare increase would be allowed, due to unchanged fares in 2013. With more trains to be injected into the system, we believe that a switch to the new rail financing framework is necessary for SMRT. If SMRT stays on its existing rail financing framework, the company’s “Off Balance Sheet Liabilities” could increase substantially and will be a major drag on future cash flows.

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