+ Improving taxi profitability. Taxi EBIT jumped to S$14mn, excluding relief. This came from lower rebates and operating costs, namely staff costs.
+ Surging cash flows. Operating cash flows more than doubled YoY to S$224.9mn, thanks to better profits and government relief. Net cash spiked to S$338.9mn from S$190.5mn three months earlier.
– Public transport’s turnaround weak. Public transport EBIT was down 47% YoY to S$17mn, excluding relief. Rail revenue was weak, with ridership at 65-79% of pre-COVID 19 levels. Australia was stable while the UK remained affected by a lack of tourism travel.
The recovery is clouded by a resumption of lockdown and stricter social distancing in Singapore. Lower mobility will hurt rail ridership and also raises the need for higher taxi rental rebates from the current S$10/day.
Maintain BUY and TP of S$1.83
We keep our FY21e forecasts. DCF target price is maintained at S$1.83. While the timing is unclear, any change in the revenue model for the key Downtown Line from fixed fees to risk- sharing with the government could provide stability to its public transport business.