June 5, 2012 / 1:21 AM / 7 years ago

STOCKS NEWS SINGAPORE-OCBC downgrades public transport sector

OCBC Investment Research has downgraded Singapore’s public transport service sector to neutral from overweight, saying operational challenges in the city-state are likely to put pressure on margins.

The broker has hold ratings for both public transport operators SMRT Corp Ltd and ComfortDelGro Corp and target prices of S$1.71 and S$1.53 respectively.

Although fuel prices have fallen recently, this will be offset by greater fuel consumption due to greater frequency of bus and train services to satisfy growing demand, said OCBC.

It said the lack of any fare increments this year is also likely to hurt margins for SMRT and ComfortDelGro and more staff will be needed to meet service standards for higher usage.

Shares of SMRT were unchanged at S$1.62 and have fallen 8.5 percent since the start of the year, underperforming the Straits Times Index’s 3 percent gain. ComfortDelGro was up 0.3 percent at S$1.455 and has risen 2.8 percent so far this year.

0911 (0111 GMT)

(Reporting by Charmian Kok in Singapore; charmian.kok@thomsonreuters.com)


8:45 STOCKS NEWS SINGAPORE-Index futures up 0.6 pct

Singapore index futures were up 0.6 percent on Tuesday, indicating the benchmark Straits Times Index may open higher.

Asian shares and commodities staged a mild recovery on Tuesday, with stocks holding at around 2012 lows, as investors looked to European policymakers and the wider G7 to take decisive action to address the worsening euro zone crisis.

Reporting by Charmian Kok in Singapore; charmian.kok@thomsonreuters.com

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