BTS GROUP HOLDINGS
Play
Synergy with NPARK to raise BTS's property business BUY
BTS Group Holdings Plc (BTS)
- Shareholders approve share exchange with NPARK
NPARK's shareholders have approved the synergy with BTS (property business). BTS
would sell all shares in BTS Assets Co., Ltd. and Kamkung Properties Co., Ltd. (BTS
holding 100% stake) comprising 1) Eastin Grand Sathorn, and 2) Lands on Phaholyothin
Road (near BTS Mo Chit Station) and Phayathai Road (near BTS Phayathai Station)
totaling 18 rais (valued B8-10bn) in exchange for up to 37.09% shares in NPARK
(valued B10bn; the final purchase price is subject to the due diligence) comprising 1)
up to 213 billion ordinary shares of NPARK at the price of B0.047/share, and 2) fiveyear
warrants to purchase up to 106.5 billion shares (two ordinary shares to one unit of
warrant) with the exercise price of B0.047/share; BTS is granted an approval of a
waiver from the requirement to make a tender offer for NPARK's shares.
- To raise BTS's property business, grant B3-3.5bn extraordinary profit
The synergy deal is projected to complete in 4Q14/15 (ending March 2015), granting
BTS B2-3bn extraordinary profit (accounting profit; no effect on fair value). Including
joint venture with SIRI (property business on BTS’s lands near BTS stations), BTS is
projected to recognize B3-3.5bn non-recurring profit in 4Q14/15 from both allies (not
included in our forecast). We are optimistic that BTS's synergy with NPARK and SIRI
would raise value of BTS's property business; BTS's lands would be sold to allies, so
they would be developed. BTS acquires shares in NPARK (the largest shareholder) at
the lower price than NPARK’s actual share price, so it would have a limited downside.
Also, BTS would benefit from SIRI's experience, expertise, and good image.
- Upside from skytrain extension lines. High dividend yield
BTS is still attractive. It also has an upside from auctions of skytrain extension lines
which would be approved in February. Its dividend yield is 6.1% (payment projected in
May 2015). With B1bn redemption (limited at B6bn), the share price would have a
limited downside
