So I really get this question a lot on all channels: Given the negative sentiments with the issues faced by SMRT, do you think it is a good time to invest in SMRT?

I think its one stock most people classify as pillow stock because SMRT will always be around.

Rather than do an in-depth analysis I will try to reason it through a few angles.

Business Model

So here is how I see it:

  1. Regulated prices earning more than fuel costs, staff costs and necessary asset purchases
  2. When fuel cost is always a going concern, and asset purchase will have to go up to improve quality of services, total costs will have to rise
  3. Prices may not readily go up due to public sentiments so it means that margins will be squeeze
  4. Retail earns SMRT 70++% margins versus 20+% transport margins. Do you see the additional of circle line …