Italian-Thai Development
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Green Line slated to bulk up backlog BUY
Italian-Thai Development Plc (ITD)
Adding new job –North Green Line contract 1- After submitting the lowest bid of
the four vying for the job, ITD is poised to win the largest of the four contracts, the
Bt15bn civil work contract 1 (Mo Chit-Sapan Mai). ITD bid Bt15.2bn, estimating cost at
Bt14bn. This is the biggest contract of the four and further cements ITD as a leader in
its industry, justifying a further rise in its already stellar price performance.
North Green Line Contract 1 has the highest value of all the contracts, accounting
for 57% of the total Bt26bn project value. Only four contractors submitted bids: ITD, CK,
STEC and its JV partner AS, and UNIQ and its China JV partners. The North Green Line
project (Mo Chit-Khu Khot) is made up of four contracts, and with ITD poised to win #1,
we tag UNIQ for contract 2 and STEC for 3 and 4. The MRTA will now negotiate with ITD
to finalize the cost, with the contract signing expected early in 1Q15. Construction
should start very soon after that and finish up in 2018. Once the contract is signed, it
can be slotted into ITD’s backlog. Next up for bidding will be first the Orange (Taling
Chan-Minburi) and then the Pink (Khae Rai-Minburi) lines.
Latest backlog at Bt250bn, adding North Green Line contract 1 soon. As of
November 4, ITD had the largest outstanding backlog of Bt250bn (ITD itself Bt224bn
and Bt26bn from subsidiaries), up from Bt245bn at end-3Q14. This includes concession
backlog of Bt150bn (Bt38bn from the Bangladesh elevated expressway and Bt112bn
from the Mozambique project), ITD. The North Green Line will add Bt14bn and the
potash project, expected to start construction in 3Q15, will add revenue of Bt15bn p.a.
after commercial operational startup in 2017.
Target price maintained at Bt10.4, BUY. ITD shares have risen a sharp ~30% QTD,
~95%YTD but given the solidity of the company and its regular additions of large
projects to its already high backlog, we see further upside to share price. We value ITD
at Bt10.4 based on Bt6.25/share on 12.5x EV/EBITDA, with Bt2.0/share for its overseas
projects and Bt2.1 for its potash project. BUY.
