Melbourne Contract Missed.

It is interesting to see when tourism stocks are going nuts in an upward direction today, SLK is down 5.5%.

The explanation has to be the announcement that the big bus contract in Melbourne has been awarded to Kinetic. There was talk locally that the sole reason for buying Sita Buslines in Melbourne was to position SLK for a tilt at this contract.

It also means that Kinetic is getting serious in Australia. They started here with the Skybus airport operations and bought out airport operators in other states before getting in to contract bus services. Kinetic is owned by Canadian pension funds. The other major bus operator in Australia is the Singaporean owned CDC group.

For the moment, Sealink can lay claim to be the only Australian owned of the three big operators. However, Comfort Del Gro in Singapore is planning to float CDC on to the Australian market.

The past few years has seen SLK, through its Transit Systems arm, win a lot of good contracts. Obviously, competition is ramping up for future contracts and contract renewals.

Meanwhile, lets hope an opening up can now make the tourism side of SLK more profitable.