In a Mayban Kim Eng report released on Friday, SMRT could get slapped with a $50 million fine for Tuesday’s islandwide breakdown on the NSEW lines.
The broker maintained its “Hold” call on SMRT stocks. They believe that LTA could fine SMRT for the service disruptions and this could reduce the net income forecast for SMRT.
When queried on how it came to its $50 million estimate, Maybank Kim Eng said:
“Recall that Parliament passed a bill on Feb 17, 2014, that increased the maximum fine for every rail disruption to 10 per cent of an operator’s annual fare revenue for the relevant rail line.
“This was up from the previous maximum of $1 million. SMRT’s FY3/15 rail revenue was $644 million for its North-South, East-West, and Circle Line. This suggests a maximum fine of $64.4 million for its entire rail network.”
As Tuesday’s disruptions did not affect the Circle Line, the maximum fine could be closer to $50 million.