The Prime Minister Mr Lee listed land transport as one of 3 significant policy decisions in 2008 in his New Year Message.
He noted the following:
- Key focus is to improve our public transport so that more Singaporeans will take buses and trains, instead of driving cars.
- Singapore roads are getting more crowded and traffic jams worsening.
- While measures like building more rail lines are long-term in nature, improving bus services, making transfers more seamless and convenient, can and should be made more quickly.
PM Lee suggested the following solutions:
- Lowering the vehicle growth rate;
- Stepping up measures to manage demand for road space: enhance the ERP and extend its coverage so that driving costs significantly more; and
- Balancing the above with lower vehicle ownership taxes.
Comments
1. The PM’s New Year Message is a reminder the Land Transport Review, the first in 10 years, is not ready (it was to have been completed by end’07), underscoring the complexity of the undertaking (eg opposing views on whether there should be one or more public transport operators).
2. What is however clear is the need to lower vehicle growth rate - recall former PM Goh had allowed for a net 3% annual increase. And driving costs, especially ERP charges, will be significantly higher (charging 50 cents to a dollar on ECP since November does not seem to have made a difference).
3. Tan Chong (TCIL) is probably the “purest” car play on the local market, hence likely to be affected by lower COE availability. But TCIL is an unattractive stock in any case, having been recently rebuked by the HK Exchange for poor corporate governance.
4. Jardine C&C is today more a proxy for the Indonesian, than Singapore, car market (where
sales of Mercedes Benz, its lost lucrative marque, have slowed in recent years) while WBL has a
myraid other interests.
5. Comfort Delgro’s SBS Transit should, in our opinion, merge with SMRT. But this is likely fraught with political sensitivity (over fare increases), and may or may not become reality.
Good thing however is that they offer attractive yields. (Comfort Delgro paid 10.05 cents per share, net, for 12 months ended Jun’07, giving a yield of 5.5% at $1.83. SMRT’s yield is 4.5% at $1.68 based on 7.5 cents net for 12 months to Sept’07.)
6. We prefer SMRT.
He noted the following:
- Key focus is to improve our public transport so that more Singaporeans will take buses and trains, instead of driving cars.
- Singapore roads are getting more crowded and traffic jams worsening.
- While measures like building more rail lines are long-term in nature, improving bus services, making transfers more seamless and convenient, can and should be made more quickly.
PM Lee suggested the following solutions:
- Lowering the vehicle growth rate;
- Stepping up measures to manage demand for road space: enhance the ERP and extend its coverage so that driving costs significantly more; and
- Balancing the above with lower vehicle ownership taxes.
Comments
1. The PM’s New Year Message is a reminder the Land Transport Review, the first in 10 years, is not ready (it was to have been completed by end’07), underscoring the complexity of the undertaking (eg opposing views on whether there should be one or more public transport operators).
2. What is however clear is the need to lower vehicle growth rate - recall former PM Goh had allowed for a net 3% annual increase. And driving costs, especially ERP charges, will be significantly higher (charging 50 cents to a dollar on ECP since November does not seem to have made a difference).
3. Tan Chong (TCIL) is probably the “purest” car play on the local market, hence likely to be affected by lower COE availability. But TCIL is an unattractive stock in any case, having been recently rebuked by the HK Exchange for poor corporate governance.
4. Jardine C&C is today more a proxy for the Indonesian, than Singapore, car market (where
sales of Mercedes Benz, its lost lucrative marque, have slowed in recent years) while WBL has a
myraid other interests.
5. Comfort Delgro’s SBS Transit should, in our opinion, merge with SMRT. But this is likely fraught with political sensitivity (over fare increases), and may or may not become reality.
Good thing however is that they offer attractive yields. (Comfort Delgro paid 10.05 cents per share, net, for 12 months ended Jun’07, giving a yield of 5.5% at $1.83. SMRT’s yield is 4.5% at $1.68 based on 7.5 cents net for 12 months to Sept’07.)
6. We prefer SMRT.
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