Why SMRT's $17m goodwill impairment took everyone by surprise

It was all about timing.

According to OCBC, SMRT Corp issued its first ever profit guidance for 4Q13, attributing the expected net loss to higher operating expenses and an impairment of the S$17m in goodwill for its Chinese associate, Shenzhen ZONA Transportation Group.

"We view the goodwill impairment as a way for SMRT’s new management to turn the page on its past overseas ventures although the timing did take us by surprise," OCBC said.

While the Shenzhen ZONA venture failed to yield the desired results, its performance only turned negative over the past two quarters.

OCBC added that on the other hand, SMRT was willing to wait out eight quarters of much larger operating losses on its SG bus operations before making a goodwill impairment in 4QFY12.