SINGAPORE (Aug 10): UOB KayHian urges SMRT shareholders to accept the exit offer as 1Q results continue to be impacted by rail woes while its bus, taxi and rental business put up a poor showing.

&ldquo We highly recommend investors to accept the offer price of $1.68, which we believe provides a more palatable exit as fundamentals could deteriorate further. Accept offer: $1.68,&rdquo says lead analyst Thai Wei Ying in a Wednesday report.

To recap, SMRT reported 1Q17 net profit of $15.5 million which fell below UOB and Street&rsquo s expectation. Group revenue decreased 2% to $313.9 million. Meanwhile, operating expenses rose 0.8% to $311.5 million, due mainly to higher staff costs and repair and maintenance costs.

Rail business reported a higher operating loss of $9.4 million in 1Q17 compared with an operating loss of $5.3 million in 1Q16. This was driven by higher loss in train operations as a result of lower revenue due to lower average fare resulting from 1.9% fare reduction and cannibalisation impact by DTL2 operations, higher staff costs and repairs and maintenance related expenditure.