if i have money to invest, i will never buy into transport
companies, esp singapore-centric ones! not even 1 lot
firstly, routes n fares are government controlled..
company is a "private" entity... so obviously theres serious
conflicts of interests
we are seeing that more revenue is coming from non fares sources
like rental and advertising income
also, buses will have to be bought, lifespan only 17 years.
replacement of buses will be frequent, and capital expenditure is
not cheap, hence, high depreciation
operating costs wise, we say, diesel costs alone. even SIA is
hurting. capital intensive
only consolation is, the ridership/ revenue will always stay
constant or increase slowly
better known as a sunset industry
but then, our 2 operators are also GLCs, obviously they are
majority and indirectly controlling shareholders.. their counters
already quite illiquid
On a personal note, I would buy maintain a "hold" position on
all transportation-related companies in that industry. SIA
Limited/SIA 200 would not be a good buy now either. It is not
capital-intensive. Rather it is because it is surviving by carrying
out commercial operations with fuel, there is no way it cannot be
unaffected by this increase in fuel prices.
Reason being, with oil rocketing past US$100/barrel and prices
of commodities rising due inflation, it offsets any potential
growth in the industry. Land transport is protected partially by
the ability to skim unprofitable services (if there are any left
actually) to curb rising operating costs. The other means is to
hedge oil prices.
SQ does this to a certain (and successful) extent. I think
according to the FY report I saw that somewhere too, but I don't
know whether that is significant to impact ops.
————————————————
As always, to prevent my balls being screwed (and sued) off...
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