SBS Transit Ltd: 1H2025 Financial Results Analysis

SBS Transit has released its unaudited financial results for the half-year ended 30 June 2025. The report highlights a challenging operating environment due to the loss of a key bus package, but also notes cost management efforts and some bright spots in its commercial services segment.

Key Financial Metrics

Segmental Performance Highlights

• Public Transport Services: Revenue fell by 5.1% to \$715.6 million, mainly due to the loss of the Jurong West bus package in August 2024. While rail ridership continued to grow (North East Line +2.4%, Downtown Line +1.0%, Sengkang-Punggol LRT +0.6%), this was insufficient to offset the bus package loss. Operating profit for this segment dropped 10.3% to \$24.2 million due to lower revenue and higher staff and other operating costs.
• Other Commercial Services: Revenue increased by 11.9% to \$30.3 million, driven by higher digital advertising and the SG60 campaign. Operating profit in this segment surged 28.3% to \$9.9 million, despite a higher advertising concession fee.

Dividend Payout

SBS Transit declared a tax-exempt interim dividend of 8.95 cents per ordinary share, representing a 90% payout ratio, which is significantly above its minimum stated policy of 50%.

Outlook & Management Commentary

Chairman/CEO Statement: The CEO, Mr. Jeffrey Sim, stated: “Our focus remains steadfast on strengthening our operational excellence and in enhancing the commuting experience for our passengers as we continue to move people in a safe, reliable and sustainable way.” The tone is steady and operationally focused, highlighting commitment to service and sustainability amid external challenges.

Operational Outlook:

• Rail revenue is expected to improve, supported by steady ridership growth and fare adjustments implemented in late December 2024.
• Bus revenue is expected to further decline, reflecting the full-year impact of the lost Jurong West Bus Package. The Tampines Bus Package is up for renewal in July 2026, with a bid already submitted.
• Manpower costs are anticipated to rise due to a tight labour market, but fuel and energy costs are expected to ease barring unforeseen circumstances.

Conclusion & Investment Recommendations

Performance Summary: SBS Transit’s 1H2025 results reflect a modest decline in overall financial performance, with revenue and profits down on a year-over-year basis due to the loss of a major bus contract. Cost control measures and growth in commercial services have partially mitigated the impact, but headwinds remain, especially in the bus segment. The company maintains a high dividend payout, signaling confidence in its cash flow and commitment to shareholder returns.

Recommendation for Existing Holders: Given the stable dividend payout and management’s focus on operational stability, existing investors may consider holding their positions. The downside appears limited by cost controls and a robust dividend, but monitor for further contract losses and rising manpower costs.

Recommendation for New Investors: Potential investors should be cautious. While SBS Transit offers an attractive yield and some resilience, near-term earnings growth is challenged by structural industry changes and contract expiries. Entry may be considered if there is a clear rebound in rail or commercial segment performance, or if the company secures new bus packages.

Disclaimer: This analysis is based solely on the information in the company’s 1H2025 report and is not personalized investment advice. Please consult a licensed financial advisor and consider your own risk tolerance and investment objectives before making investment decisions.

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