+ Operating leverage intact. Revenue rose S$208mn YoY to S$1.74bn. Due to the business’ large fixed costs, around three-quarters of the revenue increase or S$154mn immediately translated into higher earnings. Taxis benefited from lower rental discounts while public transport gained from higher rail ridership and fuel indexation.
+ Return of interim dividends. FCF in 1H21 was S$287mn, up from S$189.1mn in 1H20. Interim DPS of 2.1 cents represents a payout of 50%. This is still below the 4.5 cents and 66% paid out before the pandemic in 1H19. Capex will likely trend below pre-pandemic S$300mn levels as a programme to purchase hybrid taxis is in its last stages with 600-700 units left to be purchased.
Operating leverage and end of lockdowns are earnings catalysts, in our view. Pre-pandemic revenue and operating profit in 1H19 were S$1.92bn and S$222mn respectively. These compares with current operating profits before government relief of S$77mn. Our FY22e forecastes assume a close-to-full recovery to pre-pandemic levels.