SMRT Corp is the key player in the upcoming Johor Bahru-Singapore Rapid Transit System (RTS) Link. Upon completion, the Temasek-owned firm will have an even greater role, connecting commuters from Woodlands North Station to the rest of the island.
The company operates four businesses, with SMRT Trains, SMRT Buses, and Strides taxi services focusing on transportation. This diverse portfolio positions the company well to handle the influx of commuters, no matter how they travel.
In 2020, SMRT’s subsidiary, SMRT RTS, formed a joint venture with Malaysia’s Prasarana RTS Operations to create RTS Operations (RTSO), which will operate the RTS Link. RTSO received a 30-year concession to own, design, install, test, operate and maintain the RTS Link assets connecting Bukit Chagar in Johor Bahru to Woodlands North.
During the design phase, RTSO collaborated with partners in Singapore and Malaysia to create unified interface designs. This collaboration included harmonising earthing systems along the viaducts and streamlining the management of critical alarms at both operations control centres to ensure smooth and integrated cross-border operations.
In its 2023 Annual Review report, SMRT chairman Seah Moon Ming describes the RTS Link as a “game-changer”. “When completed, the RTS Link will improve connectivity and generate shared economic and social benefits to both cities,” he adds.
Construction of the RTS Link was on track as of May 31, with 77.61% completed. The maintenance depot, a crucial part of the railway infrastructure located in Johor Bahru’s Wadi Hana area, is 82.14% completed and is expected to be ready for system installation by the end of the year.
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“The obvious beneficiary is SMRT because the Thomson-East Coast Line (TEL) connects directly to RTS. There’ll be spillover traffic. Until new businesses are set up in the SEZ and add to the employment opportunities in Johor, Johoreans will still travel to Singapore for work. It still takes three to four hours to come in in the morning and return in the evening,” notes Shekhar Jaiswal, head of equity research at RHB Bank Singapore. He adds that additional benefits are expected as Malaysian workers move from TEL to the new Punggol Digital District, industrial setups around Kaki Bukit, Ubi and logistics hubs near Tampines West.
Retail stock investors, however, cannot benefit from this connectivity upgrade. After facing service disruptions and financial pressures, SMRT was privatised on Oct 31, 2016, after trading on the Singapore Exchange S68 since 2000.
In an interview with The Edge Singapore in 2015, SMRT’s then-CEO Desmond Kuek said the company needed a restructuring that was best done away from the glare of the public market. “The privatisation allows an environment where this can be focused on much more decisively and allows us to bring about those changes in a more determined way, without the short-term pressures of earnings expectations,” he said.
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This need for restructuring became even more apparent as the pandemic significantly impacted SMRT. The company experienced reduced train ridership and had to offer rental relief to retail tenants in its MRT network, resulting in a 20.5% drop in revenue to $599.8 million in FY2021, compared to $754.7 million in FY2020.
In the wake of these challenges, the company has shown improved financial performance during the post-pandemic recovery. SMRT’s revenue grew 26% y-o-y in FY2023, reaching $813.2 million, up from $645.5 million in FY2022. However, ebitda dropped 61% year-over-year to $6.1 million due to reduced other operating income and higher staff, repair, maintenance and electricity costs. Profit after tax surged 282% to $42.5 million in FY2023, primarily due to dividend income from its subsidiary, SMRT TEL.
Looking ahead, SMRT recognises the need to expand internationally to enhance its global presence. The company is committed to investing in Australia and Europe to grow its market share and solidify its position as a global player. “While SMRT broadens our overseas footprint, we remain firmly anchored on our core public transport services in Singapore and are determined and committed to meet our commuters’ needs,” adds Seah.
