The investment arm of Maybank, Kim Eng Securities, today placed a “hold” recommendation for investors looking at the shares of SMRT because they believe that the privatised public transport operator may be fined up to S$50 million for the massive breakdown on Tuesday (July 7).
“We believe that the regulators could fine SMRT for the service disruptions. This poses downside to our FY3/16 net income forecast of $119.4 million.
This was up from the previous maximum of $1 million. SMRT’s FY3/15 rail revenue was $644 million for its North-South, East-West, and Circle Line. This suggests a maximum fine of $64.4 million for its entire rail network.”
But as Tuesday’s disruptions did not affect the Circle Line, the maximum fine could be closer to $50 million.”
SMRT’s share price tumbled 4.5% from S$1.55 to S$1.48 when news of the severe breakdown broke out. The public transport operator and the Transport Ministry however are still not able to find the aggravating defect that caused Singapore’s biggest train breakdown which affected more than 250,000 passengers with 3.5 hours of stoppage.