UBS downgraded Singapore's public transport operator SMRT Corp Ltd to sell from neutral, citing a squeeze on profitability and cut its target price to S$1.41 from S$1.70.
The government's push for higher spending on rail means structurally lower margins for SMRT, and with all of its revenue from Singapore, the company would find it harder to mitigate the tougher operating environment, UBS said.
It decreased its earnings per share estimates for SMRT in 2013 and 2014 by 12 and 11 percent respectively, citing weaker-than-expected ridership for its Circle Line.
UBS retained its neutral rating on Comfortelgro Corp Ltd , saying the firm would be supported by its overseas divisions.
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