+ Operating leverage intact. Despite a sluggish rebound in revenue of 3% YoY to S$915mn, operating leverage drove normalized PATMI to surge 10x to S$31.8mn. Contributing to the improvement in 4Q21 earnings was an S$18mn YoY decline in depreciation. The drop in CAPEX for the past two years will keep depreciation low.
– Sluggish taxi revenue. Taxi revenues were weaker than expected due to the continuation of rental rebates of around 25% in 4Q21. The rebates continued into 1Q22 at an estimated 15% rate. Higher taxi fares will help improve driver takings but an offset will be the jump in fuel costs.
The challenge in FY22e will be higher fuel and electricity costs. Bus operations will be able to pass through the increased fuel costs due to fuel indexation. Taxi drivers will bear the brunt of higher fuel but improving economic activity and higher fares will soften the impact. Rail will bear the higher electricity cost as the ability to pass on the cost from higher rates is limited. Improvement in passenger traffic will be critical. Rebound in ridership was moderate in 2021, up only 5% to 744k/day (2019: 1.21mn/day). Earnings from Australia are expected to be stable due to the contractual nature of the bus services.