Bangkok Expressway

Bangkok Expressway Plc (BECL)

What’s new? BECL yesterday reported expressway traffic numbers for August 2012—average daily traffic volume (BECL+NECL) was 1.079m trips (1.016m trips for BECL and 63,285 trips for NECL). Traffic in August inched up 2.4% YoY but dipped 0.9% MoM.

YTD traffic growth remains above target: The slow YoY traffic growth was because there were more holidays in August 2012 than in August 2011—Buddhist lent was in July last year against early August this year. Furthermore, the greater number of public holidays in August was responsible for the MoM decline in mean daily traffic volume. However, average daily traffic volume for working days was 1.168m trips in August 2012, a 2.4% MoM increase from 1.141m trips in July 2012.
Regardless, BECL’s 8M12 average daily traffic volume rose by 5.2% YoY to 1.078m trips, which was comparable to its pre-flooding level and well above-trend of the firm’s FY12 target of 4.2% growth. 

Expect Sept traffic to expand both YoY and MoM: That expressway traffic increase is being driven by rising numbers of vehicles on the road, boosted by the govt’s first-time car buyer tax rebate and an absence of public holidays. BECL’s average daily traffic volume in 3Q12-to-date rose by 3.7% YoY and 3.0% QoQ to 1,084,446 trips. Also, the third-quarter is normally high season, as there are few public or school holidays during the period. We, therefore, expect BECL’s 3Q12 core profit to rise YoY and QoQ.

Action: The stock has outperformed the SET by 15% over the past two months, driven by strong traffic growth and anticipation that Cabinet will approve the construction of the Si Rat-Outer Ring Road Expressway (Sector B+). As Cabinet approved Sector B+ early this month, we don’t expect construction approval to boost the share price much in the near term.
However, expectations of strong core profit growth in 3Q12, a forecast FY11-14 core profit CAGR of 27%, and a high dividend yield will continue to support the share price. In addition, expectations of a toll fee increase of Bt5 (probably only for Sectors FES and A) in Sept 2013 should boost the stock price over the medium-term. BECL currently trades at an FY12 PER of 9.2x, a discount to its long-term average of 10x, and an FY12 dividend yield of 6.3%.