Wolf Money(SBS Transit Ltd)

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There was a new addition to The Lone Wolf Fund this month. I bought just about enough shares in SBS Transit to generate enough dividend to cover my family’s public transport cost. The recent 7% increase in public transport fares which workout to be around 10c-11c extra per trip, will have a positive impact on SBS Transit Rail’s bottomline as the company co share fare revenue with LTA under the new rail financing framework for DTL and NEL. DBS research estimates the fare hike will improve SBS Transit’s bottomline by $14.7m. The newly introduced fare formula helps address the drop in daily commuters due to work from home trend reducing growth in passenger numbers. The upward adjustment of fares increase SBS Transit Rail revenue by close to $21m a year with 15.6% of the outstanding fare increase carrying over to next year fare review. The government pays a grant to the public transport companies for the deferment of the outstanding fare increases.

Rail ridership in August reached an all time-high, providing a bedrock for stable revenue. The company is in a net cash position to a tune of plus and minus $340m, equivalent to $1.10 cash per share or 40% of stock price. 


(Source: SBS Transit)


SBS Transit will be celebrating their 50th anniversary this year. I am hopeful of a special dividend given to shareholders as a token of appreciation for their continued support. The strong cash flow is supportive of higher normal dividend payout. We shall see. Finger crossed.

Risk includes higher oil prices which affect the cost of electricity but the downside risk is capped as diesel cost is absorbed by LTA. Another risk involves failure to win bus packages. Currently, they are not subjected to tender risk for the next couple of years as they had just won the Bukit Merah bus package in August this year for next 5 years, with the option for LTA to extend the package for another 2 to 5 years at the end of the contract. Remember bus doesn’t come equip with rocket engine, do expect the share to move slowly at 50km/hr. God bless. 


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All investments is highly speculative in nature and involves substantial risk of loss. We encourage our reader to invest very carefully. We also encourage reader to get personal advice from your professional investment advisor and to make independent investigations before acting on information that we publish. Much of our information is derived directly from information published by companies or submitted to governmental agencies on which we believe are reliable but are without our independent verification. Therefore, we cannot assure you that the information is accurate or complete. We do not in any way whatsoever warrant or guarantee the success of any action you take in reliance on our statements. All information provided are for education only. Buyer beware, do you own due diligence.

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