Bangkok Expressway

Bangkok Expressway Plc (BECL)

- Catalysts: 1) the 11% rise of its TTW stake in mid 1Q13F; 2) +Bt5/car toll
rate hike in Sep 2013F, based on CPI on Mar 1; 3) continued high traffic;
4) potential gain/valuation re-rating from listing CK Power
- Raised earnings by 119% in 2013F and 10% in 2014F
- Added to sector’s top buy list with highest core 2013 EPS growth of 45%
vs. trading at 14.8x 2013PE; Maintain BUY with a new SOTP PT of Bt50

Catalyst #1: 11% boost in TTW stake in mid-1Q13. BECL is buying 11% more in TTW
from CK, raising its stake to 20.24% from 9.24% now. It will pay Bt7.55/share for a total
of Bt3.3bn. Approval at the EGM on 6 Feb 2013 is expected, with the purchase to be
completed that same month. Positives include: 1) addition of 13% to core earnings in
2013-14 as contribution changes to equity income from dividend income; 2) ~Bt2bn
extra gain from revaluation of its earlier 9.24% stake in TTW at the cost of Bt3.08/share
to market price at the transaction date.

Catalyst #2: +Bt5/car toll rate hike in Sep 2013F, based on CPI on Mar 1. If CPI for
Bangkok in Feb 2013 (announced on Mar 1, 2013) is at least 114.44, BECL can request
EXAT to authorize a rise in toll rate. This would take until August to approve, with the
tolls raised from 1 Sep 2013 onwards. Based on the recent inflation (CPI for Bangkok
was 115.07 in Dec 2012), BECL is likely to receive approval for a +Bt5/car toll rate hike.
Catalyst #3: Strong traffic, especially in 1H13. Backed by robust domestic car sales
at 1.4mn cars (+81% YoY) in 2012, BECL reported strong traffic growth at +5.8% in 2012,
above the historical average growth of 3% p.a. With delivery of new cars bought under
the first-car scheme this year (mostly in 1H13), traffic will continue to grow.
Catalyst #4: Plan to list the CK Power in the next few months. BECL plans to list
CK Power in March-May 2013. Currently, CK Power shareholders include CK (38%), BECL
(30% at the cost of Bt10/share), TTW (30%), and others (2%). The potential gain or
valuation re-rating from listing CK Power via its direct stake under BECL and indirect
stake under TTW will be another catalyst for BECL.

Raised earnings. We raised 2013F earnings by 119% to Bt4.3bn and 2014F by 10% to
Bt2.7bn to reflect: 1) extra gains from the revaluation of its 9.24% stake in TTW at
~Bt2bn in 2013; 2) a 13% rise in TTW contribution in 2013 and 7% in 2014 from higher
tariff and volume plus corporate tax refund for Pathum Thani Water (PTW); 3) a 2%
rise in BECL traffic growth to 3% in 2013-14.

Added as sector’s top buy. We raised end-2013 SOTP PT to Bt50 (from Bt39), backed
by: 1) earnings revision; 2) the rise in valuation from the rise in TTW/BMCL share prices.
We add BECL to our sector’s buy list in recognition of its highest 45% core earnings
growth in 2013F and undemanding valuation (trading at 14.8x 13PE vs two-year
earnings growth of 37%). Risks: 1) TTW earnings contribution depending on EGM
approval on Feb 5 (CK) and Feb 6 (BECL); 2) Bt5/car toll rate hike depending on inflation
number on March 1; 3) a change in traffic flow.