SCG SP / XZB.SI
Strong post-RTO performance; integrated ecosystem scaling
Transportation
Skylink posted strong inaugural post-RTO results, with revenue rising 34.1% YoY to S$35.36m, gross profit up 45.9% YoY to S$9.91m and gross profit margin improving 2.3ppt to 28.0%. Excluding the non-recurring non-cash RTO accounting effect and one-off RTO listing expenses, underlying operating profit before tax and net profit increased 64.3% and 61.7% YoY to S$4.70m and S$4.43m, respectively. Operating cash flow remained healthy at S$11.97m.
Leasing revenue increased 37.8% YoY to S$26.05m, supported by a larger fleet, higher utilisation and stronger long-term contract mix. Fleet size rose to 1,366 vehicles, while total active contracts increased to 1,264, with 1,151 contracts of one year and above. The segment’s gross margin improved to 17.9%, despite higher COE-driven depreciation.
Elevated COE prices raise fleet acquisition costs and depreciation but also make outright vehicle ownership more expensive for SMEs, improving the relative appeal of leasing. With around 21% of commercial vehicles reaching the 10-year lifecycle and management planning to add around 100 vehicles over the next year, of which around 90% are expected to be EVs.
We maintain our OUTPERFORM rating on Skylink Holdings Ltd with an unchanged 12-month target price of S$0.58, based on our DCF-derived equity valuation with a 13.5% WACC and a 2% terminal growth rate.
Key downside risks include (i) weaker SME demand or delayed vehicle replacement cycles; (ii) asset-quality deterioration in the credit book; (iii) higher COE prices, depreciation and residual-value pressure; (iv) execution risk in EV fleet expansion and workshop ramp-up; (v) higher staff and compliance costs after listing; and (vi) leverage and funding-cost risk given the asset-backed growth model.
