BTS
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Free warrants (BTS-W3) The BTS Group's board of directors has approved the offer of free warrants to existing shareholders. The issuance of warrants will provide BTS the flexibility to manage its financial position and accumulate reserves for future inv
Since the warrants are still a long way
from being in the money, there is no
immediate dilution effect. Thus, we
maintain our forecasts. We reiterate
our Outperform call and SOP-based
target price of THB10.5. Key drivers
are BTS bagging four extension line
contracts and more revenue
contribution from VGI and the
property business.
What Happened
Apart from the recent interim
dividend of THB0.19/share (XD on
22 Aug, payment on 6 Sep), BTS will
grant 3,972m warrants to existing
shareholders at no cost. The issuance
must be approved by the EGM on 11
Oct 13. The stock will go XW on 16
Oct 13. The allocation ratio is 1 unit of
warrant (BTS-W3) for every three
existing BTS shares. The term is five
years and the warrants can be
exercised after three years at a ratio of
1w:1 common share at THB12.0.
However, BTS-W3 will be listed on
the SET on 5 Nov 13.
What We Think
According to the mass transit network
expansion plan, there are many
routes to be operated in the next few
years until 2029, a total of 508
kilometres. Out of the several lines,
BTS is now interested in bidding for
four future lines (total length 78.8km).
Total investment is estimated to be
THB117bn (civil works c.THB57bn
and E&M c.THB60bn). Therefore, the
warrants are aimed at raising funds
and proceeds are expected to total a
maximum of THB47.7bn, which adds
to the funds raised by BTS early this
year from the sale of its net future
fare box revenues to BTSGIF.
. BTSGIF
will pay THB0.117/share as its first
dividend (XD on 29 Aug).
What You Should Do
BTS’s share price has dropped a
significant 12% in a month, less than
the decline in the SET index at 14%.
However, BTS has given the
assurance that it will pay a total
THB21bn in dividends during
FY14-16. Our target price offers
potential upside of 42%.
