[SINGAPORE] The government yesterday accepted in full the recommendations by the Fare Review Mechanism Committee (FRMC), which include a new fare formula, the fare review mechanism, and various concession schemes.

Transport Minister Lui Tuck Yew told Parliament the next task will be for the Public Transport Council (PTC) to apply the new formula for the next fare review exercise, likely to be implemented in the first half of next year.

Mr Lui called the FRMC report on public transport fares made public a week ago " fair and reasonable and contains a timely reminder that we need to make regular fare adjustments from time to time to ensure that the system is sustainable and workable" .

1. Green==> Forecast
2. Red=> > Disagreement

Costs  escalated in several business  segments. The large jump in costs  was the result of a sharper rise in staff  costs (+27% yoy), wage adjustment  and higher headcount.

Here's more from CIMB:

We increase all the key operating  expenditure assumptions, although  we think that staff costs should hover  around this level for the rest of the  year (c.40% of revenue). SMRT has  proposed to pay an interim dividend  of 1 Sct/share, a significant jump in  payout ratio in this case.

We believe  the risk of further dividend cuts is now less of a concern given the more robust cash flow structure.

Fare adjustment remains a problem  and revenue growth will still lag  behind cost inflation. We believe that  SMRT is making inroads with  regulators regarding the accounting  of asset transfers under the new  rail-financing framework.

Once this is  resolved, the end result will be  predictable cash flows and a more  sustainable financing model, which  will alter the fate of the company.  Until then, the stock may continue to  underperform.