BTS Group Holding

BTS Group Holding Plc (BTSC)

Q4 2013 net profit of Bt399mn. BTS reported a 4QFY13A (Jan-Mar 2013) net profit
of Bt399mn, +11% YoY but -63% QoQ, in line with SCBS but 20% below consensus.
Excluding FX loss of Bt24mn, its normalized profit was Bt423mn, +24% YoY and +13%
QoQ. The growth in profits came from better contribution from mass transit, media
and property. Note that on 17 April 2013, Bangkok Mass Transit System (BTSC) sold
future net farebox revenue for its BTS skytrain core network to BTS Rail Mass Transit
Growth Infrastructure Fund (BTSGIF). Though the transaction occurred in 1QFY14, in
accordance with TFRS5, revenue net of expenses from the core network have been
presented as a single line item “profit from discontinued operations” on the P&L and
“elevated rail project costs” have been reclassified to non-current assets held for sale
on the B&S (as of Mar 2013).
Key highlights in FY2013A
Mass transit: Gross profit was Bt2.9bn, +26% YoY. This was backed by: 1) a rise in
fare box revenue (+14%) from a jump in ridership (+12%) and the rise in average
fare rate (+2%); 2) an increase in O&M revenue (+52%) from the full year effect of
the opening of Sukhumvit extension line (On nut – Bearing) since August 2011 and
more revenue from the revised O&M contract for the Silom extension line.
Media: Gross profit was Bt1.7bn, +43% YoY. BTS media revenue grew by 23% YoY,
thanks to more ad space provided by new carriages (12 additional 4-car trains),
new in-train static/digital media, and increased utilization of on-station media.
Modern trade media revenue jumped by 66% YoY, due to new contracts (sale floor
area) with Tesco and BigC together with the low base effect from flooding. Office
building media revenue surged by 107% YoY from adding more office buildings to
its portfolio plus its strategy to bundle products.
Property: Gross profit was Bt560mn, +189% YoY. The surge was primarily brought
by: 1) revenue from 198 units transferred from Abstracts Phahonyothin Park since
Dec 2012; 2) revenue from the grand opening of Eastin Grand Hotel in Oct 2012;
3) the completion and closure of low-margin Baan Aur Athorn.
New dividend policy. A new dividend policy will be put to the AGM for approval on 26
July 2013. Following its 1HFY13 DPS at Bt0.163 and 3QFY13 DPS at Bt0.18, BTS’s board of
directors approved the final DPS in FY2013 at Bt0.045 (XD on 14 Jun 2013 and payment
9 Aug 2013). Longer term, the BTS board approved a dividend policy of: 1) no less than
Bt6bn on FY2014; 2) no less than Bt7bn on FY2015; 3) no less than Bt8bn on FY2016. Its
ability to pay a dividend of no less than Bt21bn in FY2014-16 will be supported by the
operational profit and extra gains from putting assets into an infrastructure fund. This
implies DPS of Bt0.53 in FY2014 (yield of 6.7%), Bt0.61 in FY2015 yield 7.5%), and Bt0.70
in FY2016 (yield 8.6%).
Maintain BUY. We maintain BUY with SOTP PT of Bt10. After the May 29 meeting, we
will provide a fuller update and revisit our forecast to reflect the sale of its future net
farebox revenue under its BTS skytrain core network to BTSGIF in April 2013.