SBS Transit Ltd: Is it worth buying

Singaporeans are familiar with the iconic SBS transit. SBS started providing bus services (Singapore bus service) and subsequently now run some of the MRT lines and LRT lines.

Being a provider of public transport, SBS is a fairly stable company until the COVID period where work from home arrangements reduced the ridership in buses and trains.

The 2020 revenue is 1.23 billion, which is a 14.8% reduction compared to 2019 with the net income at 78.9 million, representing a 2.87% reduction from 2019. As we can see, the net income was affected much lesser despite the massive drop in revenue and this is mainly because the of the government relief given during the pandemic period.

Looking at the price, SBS is trading at $3.05 currently with a range this year from $2.77 to $3.24. This represent a P/E ratio of 12. This is fairly competitive with the industry P/E ration at about 14.5.

The current dividend yield is 2.07%. This merely means you do get some dividend but this is clearly not a dividend play. A bit part of SBS future depends on the opening of Singapore. Given the clear government strategy of allowing Covid to enter the endemic phase and to slowly restore social life, I expect SBS revenue to continue to increase. At a P/E ratio of 12, this is a fairly stable company to buy into.

I would expect the price of the stock to gradually rise in the next 1 year. This in my opinion would be a better stock than airline stocks like SIA at this point.

Tilt Lee
These are my personal opinion and should not be taken as a recommendation for yourself to buy or sell any equities

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