Term paper
Financial Analysis on Smrt
1. COMPANY BACKGROUND
SMRT Corporation Ltd ("SMRT") is incorporated on 6 March 2000 and listed on the Singapore Exchange since 26 July 2000. It is the second largest multi-modal public transport service provider in Singapore, offering a range of integrated transport services, as well as the leasing of commercial and advertising spaces, engineering consultancy and project management services.
SMRT operates two out of the three MRT lines in Singapore (81.7% of the whole network) as well as the Bukit Panjang LRT system (27.1% of the rail length). The company’s bus and taxi operations form a marginal part of the transport systems at an estimate of 26.5% and 12.3% respectively, based on fleet size.
In October 2008, public transport fare was increased by a net 0.7%. Transfer rebates were increased by 10 cents while all adult and senior citizen fares were increased by 4.0 cents per ride. However, with the recent shrinking of the Singapore economy, SMRT decided to roll out a fare reduction package from April 2009. The package will include a 4.6% reduction in bus and train fares and higher transfer rebates.
2. ANALYSIS OF INDUSTRY
2.1 Intensity of Rivalry among existing Competitors
The public transport industry in Singapore is a duopoly industry, with SBS Transit being the only competitor in SMRT’s core operations, which is MRT and buses. Even so, SMRT’s operations are more focused on the MRT segment (53.96% of total revenue) while the major operating segment of SBS is in the bus industry (79.77% of total turnover). Therefore, there is very little competition between SMRT and SBS. Consumers are also not able to switch from one competitor to another as the train and bus network of SMRT and SBS cover different geographical areas of Singapore. In addition, there is no price war among the rivals because fare prices for buses and trains are being regulated by the Public Transport Council (“PTC”).
1. COMPANY BACKGROUND
SMRT Corporation Ltd ("SMRT") is incorporated on 6 March 2000 and listed on the Singapore Exchange since 26 July 2000. It is the second largest multi-modal public transport service provider in Singapore, offering a range of integrated transport services, as well as the leasing of commercial and advertising spaces, engineering consultancy and project management services.
SMRT operates two out of the three MRT lines in Singapore (81.7% of the whole network) as well as the Bukit Panjang LRT system (27.1% of the rail length). The company’s bus and taxi operations form a marginal part of the transport systems at an estimate of 26.5% and 12.3% respectively, based on fleet size.
In October 2008, public transport fare was increased by a net 0.7%. Transfer rebates were increased by 10 cents while all adult and senior citizen fares were increased by 4.0 cents per ride. However, with the recent shrinking of the Singapore economy, SMRT decided to roll out a fare reduction package from April 2009. The package will include a 4.6% reduction in bus and train fares and higher transfer rebates.
2. ANALYSIS OF INDUSTRY
2.1 Intensity of Rivalry among existing Competitors
The public transport industry in Singapore is a duopoly industry, with SBS Transit being the only competitor in SMRT’s core operations, which is MRT and buses. Even so, SMRT’s operations are more focused on the MRT segment (53.96% of total revenue) while the major operating segment of SBS is in the bus industry (79.77% of total turnover). Therefore, there is very little competition between SMRT and SBS. Consumers are also not able to switch from one competitor to another as the train and bus network of SMRT and SBS cover different geographical areas of Singapore. In addition, there is no price war among the rivals because fare prices for buses and trains are being regulated by the Public Transport Council (“PTC”).
References: Brigham E., Ehrhardt M. Financial Management Theory and Practice 12th Edition, Thomson Southwestern, 2008 Bruner, Case Studies in Finance, The McGraw-Hill Companies, 2010 1887: Company is incorporated as Johnson & Johnson. 1893: Johnson 's Baby Powder is introduced 1921: Band-Aid brand adhesive bandages make their debut. 1924: Overseas expansion begins with the establishment of Johnson & Johnson Limited in the United Kingdom 1932: Robert Johnson, known as 'the General, ' takes over leadership as president. 1943: Johnson writes the company credo 1944: Company goes public on the New York Stock Exchange. 1959: McNeil Laboratories, Inc 1960: McNeil Labs introduces Tylenol as an over-the-counter (OTC) pain reliever. 1961: Janssen Pharmaceutica is acquired 1975: Through a significant price decrease, Tylenol is transformed into a mass-marketed product. 1982: Tylenol tampering tragedy occurs 1988: Acuvue disposable contact lenses are introduced. 1989: J & J and Merck form joint venture to develop OTC versions of Merck 's prescription medications 1994: Neutrogena Corporation is acquired. 1995: Merck and J & J launch Pepcid AC; company acquires the clinical diagnostics unit of Eastman Kodak Company 1996: J & J acquires Cordis Corporation. 1998: DePuy, Inc