If you are new to my blog, just want to let you know that I am Mr Scourge who has not been driving for the last decade. After I last scraped my car, I have been on public transportation. It is not easy for Grab or Comfort Del Go to make money off me as well. We only use taxis if we are heading to the airport to catch a flight or send our loved ones. I was with my firstborn waiting for the bus after his tuition.
He asked me, “Hey Dad, do you have this bus company in your portfolio?”
I asked, “Nope, what about?”
“We need to buy this company to earn back some money because we always take buses!” He replied, “Let’s buy it!”
I explained to him that he had saved ~S$1k+ from his Ang Bao money and asked whether he would like to dump everything into the bus company.
He asked, “Who owns the train lines in Singapore?”
“SBS Transit is in the stock exchange, we can buy this. Tower Transit is owned by an Australian-listed company called Kelsian.” I explained to him.
He decided to split half into these two companies. If you ask me whether I will put my own money into these two companies, I believe there are other better companies out there. However, I do not want to pour water on his burning desire. I will help him to kick-start his portfolio. He needs to learn somewhere.
Let’s do a brief study on these 2 companies.
SBS Transit
SBS Transit is a leading public transport operator in Singapore, providing both bus and rail services. SBS Transit operates over 200 bus services with a fleet of around 3,572 buses. They cover extensive routes across Singapore, ensuring connectivity and convenience for commuters. They manage several key rail lines which include the North East Line, the Downtown Line, and Sengkang-Punggol Light Rail Transit (SPLRT). SBS Transit also provides advertising space on buses, trains, interchanges, and train stations. SBS Transit is a subsidiary of ComfortDelGro Corporation.
SBS Transit’s Revenue Growth for the first half of 2024 reported a revenue increase of 5.0%, reaching $781.4 million. Despite the revenue growth, the net profit attributable to shareholders decreased by 3.1%, amounting to $33.7 million. It declared an interim dividend of 5.58 cents per share, maintaining the same payout as in the first half of 2023. Over the past few years, SBS Transit’s earnings have been declining at an average annual rate of -5.6%, while the transportation industry saw earnings growing at 14.6% annually. However, their revenues have been growing at an average rate of 3.1% per year. Return on Equity stands at 9.7%, with net margins of 4.3%.
Kelsian
Kelsian Group Limited is a prominent integrated multi-modal transport provider and tourism operator based in Australia. Under the Bus Operations, Kelsian operates over 5,500 buses across Australia, Singapore, the USA, the UK, and the Channel Islands. They provide essential public transport services, including metropolitan bus services for state governments and private-sector transportation for resource companies and the education sector. Its Marine Services operates 115 vessels, offering ferry services and other marine transport solutions. Kelsian is involved in promoting and packaging holiday destinations, providing tours, and delivering tourists to various travel destinations. They are known for their tourism operations in regions like Kangaroo Island and the Channel Islands. Kelsian is a leader in sustainable public transport, operating Australia’s largest zero-emission bus fleet and the largest electrified bus depot. Kelsian has a significant international footprint, with operations in multiple countries, including recent expansions into the USA market.
For FY2024, Kelsian reported a revenue of $1,324.7 million, reflecting a growth of 12.9% compared to the same period last year. The net profit after tax (NPAT) for the interim period was $58.0 million, up 176.2% from the previous year. The earnings per share before amortization expense (EPSA) increased by 13.3% to 34 cents per share. ROA is around 4.3%, and ROE is around 8.5%. D/E is 44%.
I am going to start this portfolio for him to learn. I explained that I would help to record his dividends and we can reinvest them to grow the portfolio.
Update
We bought 300 shares of SBS Transit shares and 180 shares of Kelsian Group. I explained to him about the first dividend Kelsian will be giving out. I explained to him the importance of passive income. This is putting his money to work.
If you are interested in opening an account with Interactive Brokers, you can sign up via my referral link here. Interactive Brokers allows you to trade globally. The products encompass stocks, ETFs, options, futures, forex, bonds, and funds worldwide from a single integrated account.
Leave a Reply