SBS Transit Ltd (SGX: S61): FY2025 Financial Results Review & Analysis

SBS Transit Ltd, a leading Singapore public transport operator, has released its audited condensed financial statements for the full year ended 31 December 2025. This article reviews the key performance metrics, dividend developments, and management commentary, and concludes with investment recommendations based on the results disclosed.

Key Financial Metrics and Performance Overview

Historical Performance & Trends

• Revenue: Full-year revenue for 2025 fell 2.7% YoY to \$1,517.4 million, with the 2H2025 revenue of \$771.5 million down 0.9% YoY. This decline is attributed mainly to lower bus revenue following the loss of the Jurong West bus package from September 2024, though partially offset by higher rail revenue from increased fares and ridership.
• Profitability: Profit after tax for FY2025 declined 13.0% YoY to \$61.2 million. The second half saw sharper pressure, with profit after tax down 17.8% YoY, reflecting both revenue loss and higher costs (notably staff and repairs/maintenance).
• Operating Costs: Operating costs decreased by 2.5% YoY, mainly due to lower fuel and electricity costs, but this was insufficient to offset the revenue drop and rising staff and maintenance expenses.

Segmental Performance

• Public Transport Services: 2025 revenue was \$1,454.5 million (down 3.0% YoY). Segment profit fell 16.0% to \$45.1 million, impacted by lower bus revenue and higher rail license charges.
• Other Commercial Services: 2025 revenue rose 5.1% YoY to \$62.8 million, with operating profit up 18.4% to \$23.0 million. Growth was driven by increased advertising, especially digital campaigns, and higher rental income.

Dividend Developments

Despite weaker profits, the Board has proposed a significant increase in dividends:

• Final Dividend (proposed): 8.66 cents per share (FY2024: 14.69 cents)
• Special Dividend (proposed): 31.99 cents per share (FY2024: 8.41 cents)
• Interim Dividend (paid): 8.95 cents per share (FY2024: 5.58 cents)
• Total FY2025 Dividend: 49.60 cents per share (up 73.0% YoY from 28.68 cents in FY2024)

The final and special dividends are subject to approval at the AGM on 23 April 2026, with payment scheduled for 11 May 2026.

Balance Sheet and Cash Flow Highlights

• Total Equity: \$682.6 million, down 5.1% YoY due to dividend payments exceeding profits earned.
• Cash and Equivalents: \$384.3 million as of year-end, down slightly from \$385.0 million a year ago. Net cash from operating activities was strong at \$128.6 million, but large dividend outflows and capex led to a minor net cash decrease for the year.
• Net Asset Value (NAV) per Share: \$2.18 (down from \$2.30 in FY2024).

Management Outlook and Notable Events

• Bus Revenue Pressure: Bus operations revenue is expected to decline further following the loss of the Tampines Bus Package from July 2026.
• Rail Revenue Upside: Rail operations revenue is expected to grow due to fare adjustments effective 27 December 2025 and sustained increases in ridership.
• No major legal, regulatory, or corporate actions (e.g., asset revaluations, buybacks, IPOs) were disclosed.
• Related Party Transactions: Transactions with the parent (ComfortDelGro) and its group were disclosed but not unusual in size or nature.

Chairman’s Statement

Note: The full Chairman’s Statement was not included in the report. Thus, no direct quote or tone analysis is possible.

Exceptional Items, Risks, and Auditor Focus

• Auditors highlighted the recoverability of equity investments in SBS Transit Rail Pte. Ltd. as a key audit matter, relying on management’s projections for ridership, fare adjustments, and grants. No impairment was recognized in 2025.
• Provisioning for accident claims was also a focal point; the process appears robust and supported by historical trends.
• No unusual fund flows, asset sales, or exceptional earnings/expenses were disclosed for FY2025.

Conclusion & Investment Recommendations

Overall Assessment: FY2025 was a challenging year for SBS Transit, marked by revenue and profit declines due to bus contract losses. However, the company maintained healthy cash flows, preserved its balance sheet, and significantly increased its dividend payout—likely using reserves to cushion shareholders from the earnings dip. The outlook for bus operations remains negative, but rail operations are expected to see some uplift from fare increases and ridership gains.

• If you currently hold SBS Transit shares: The elevated dividend yield (49.60 cents per share) is attractive, and the company remains financially sound despite profit pressures. However, investors should be mindful of further bus package losses in 2026 and monitor whether dividends remain sustainable if earnings do not recover. Consider holding for income, but review your position if operational performance weakens further or if dividends are cut in future years.
• If you are not currently holding SBS Transit shares: The stock offers a temporarily high yield, but underlying operational trends are negative for the bus segment. Entry may appeal to income-focused investors seeking exposure to Singapore’s public transport sector, but be cautious about sustainability of payouts. Wait for signs of earnings stabilization—especially from rail or new contract wins—before building a position.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. All investments carry risks. Please conduct your own due diligence or consult a licensed advisor before making investment decisions.

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