BTS Group Holding
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Progress on new lines, plus extra gains, dividend BUY
BTS Group Holding Plc (BTS)
Short-term catalysts lie ahead in progress on the two Green Line extensions, both under the BMA, which will negotiate with BTS for new E&M and O&M contracts soon, plus a stronger 2HFY15 (Oct 14-Mar 15) on the extra gains from the sale of land to SIRI in 3QFY15 (Bt300mn) and to NPARK in 4QFY15 (Bt2.4-2.8bn) plus the announcement of an interim DPS of Bt0.3 (XD on 22 Jan). We maintain BUY with unchanged 12-month SOTP PT of Bt12.50.
Progress on new mass transit projects. The Bangkok Metropolitan Administration (BMA) has control over the existing Green Line and this led the Transport Ministry to urge placing the South and North extensions under the BMA rather than the Mass Rapid Transit Authority of Thailand (MRTA). If the entire system can come under a single agency, all trains could use the same maintenance center, which would eliminate the need to build separate centers and save up to Bt4bn. To date, the BMA has agreed to take on the South Green Line extension (Baring-Samut Prakarn) and is studying taking on the North extension (Mor Chit-Ku Kot) as well. BTS, the operator of the existing Green Line, expects to negotiate with the BMA rather than bid for the new E&M and O&M contracts for these two extensions (as was done for the earlier extensions, Saphan Taksin-Wongwian Yai-Bang Wa, and On Nut–Bearing). It expects the contracts to be settled in mid-2015. BTS also anticipates finalization of other mass transit projects in 2015, including the LRT (waiting Cabinet approval) and Pink Line (finalized as monorail).
Stronger 2HFY15 (Oct 2014-Mar 2015), bulked up by extra gain from the sale of land to SIRI and NPARK plus a slight improvement in core earnings from better mass transit (higher ridership) and media (recovering in tandem with economic revival) that will offset the softer property unit (fewer units transferred at Abstract Phaholyothin). We expect BTS to report 3QFY15 net profit of Bt918mn (+104% YoY and +44% QoQ), thanks to extra gain from the sale of land to SIRI of ~Bt300mn and core earnings of Bt618mn. It will release results on 9 Feb. We then expect net profit to reach the year’s highest at Bt3-3.4bn (+680% YoY and +327% QoQ) in 4QFY15, again off the sale of land, this time to NPARK at Bt2.4-2.8bn. Taking into account the extra gain from the sale of land, we raised our FY2015F net profit to Bt5.2bn from Bt2.4bn.
Upcoming dividend. Based on its committed dividend payment of at least Bt7bn (Bt0.59/share) in FY2015, BTS announced an interim DPS of Bt0.3 (XD on 22 Jan) and we expect BTS to announce the final DPS in May-June 2015.
BUY; SOTP PT of Bt12.5. Our PT consists of Bt2.8 for existing extension lines and Bt1.2 for the two new extensions (North and South Green lines) (DCF), Bt1.7 for BTSGIF (market price), Bt2.1 for VGI (market price), Bt1.9 from property (2x BV), and Bt2.8 from net cash. New projects give ST share price catalysts and upside (we include only two, adding Bt1.2/share, from its targeted six new projects in 2015-17). Downside is shielded by its six-month share repurchase up to Bt6bn (Bt1bn already repurchased), ending 24 Feb 2015, and its high committed dividend yield of 6-7% p.a. in FY2015-16F.
Short-term catalysts lie ahead in progress on the two Green Line extensions, both under the BMA, which will negotiate with BTS for new E&M and O&M contracts soon, plus a stronger 2HFY15 (Oct 14-Mar 15) on the extra gains from the sale of land to SIRI in 3QFY15 (Bt300mn) and to NPARK in 4QFY15 (Bt2.4-2.8bn) plus the announcement of an interim DPS of Bt0.3 (XD on 22 Jan). We maintain BUY with unchanged 12-month SOTP PT of Bt12.5.
Progress on new mass transit projects. The Bangkok Metropolitan Administration (BMA) has control over the existing Green Line and this led the Transport Ministry to urge placing the South and North extensions under the BMA rather than the Mass Rapid Transit Authority of Thailand (MRTA). If the entire system can come under a single agency, all trains could use the same maintenance center, which would eliminate the need to build separate centers and save up to Bt4bn. To date, the BMA has agreed to take on the South Green Line extension (Baring-Samut Prakarn) and is studying taking on the North extension (Mor Chit-Ku Kot) as well. BTS, the operator of the existing Green Line, expects to negotiate with the BMA rather than bid for the new E&M and O&M contracts for these two extensions (as was done for the earlier extensions, Saphan Taksin-Wongwian Yai-Bang Wa, and On Nut–Bearing). It expects the contracts to be settled in mid-2015. BTS also anticipates finalization of other mass transit projects in 2015, including the LRT (waiting Cabinet approval) and Pink Line (finalized as monorail).
Stronger 2HFY15 (Oct 2014-Mar 2015), bulked up by extra gain from the sale of land to SIRI and NPARK plus a slight improvement in core earnings from better mass transit (higher ridership) and media (recovering in tandem with economic revival) that will offset the softer property unit (fewer units transferred at Abstract Phaholyothin). We expect BTS to report 3QFY15 net profit of Bt918mn (+104% YoY and +44% QoQ), thanks to extra gain from the sale of land to SIRI of ~Bt300mn and core earnings of Bt618mn. It will release results on 9 Feb. We then expect net profit to reach the year’s highest at Bt3-3.4bn (+680% YoY and +327% QoQ) in 4QFY15, again off the sale of land, this time to NPARK at Bt2.4-2.8bn. Taking into account the extra gain from the sale of land, we raised our FY2015F net profit to Bt5.2bn from Bt2.4bn.
Upcoming dividend. Based on its committed dividend payment of at least Bt7bn (Bt0.59/share) in FY2015, BTS announced an interim DPS of Bt0.3 (XD on 22 Jan) and we expect BTS to announce the final DPS in May-June 2015.
BUY; SOTP PT of Bt12.5. Our PT consists of Bt2.8 for existing extension lines and Bt1.2 for the two new extensions (North and South Green lines) (DCF), Bt1.7 for BTSGIF (market price), Bt2.1 for VGI (market price), Bt1.9 from property (2x BV), and Bt2.8 from net cash. New projects give ST share price catalysts and upside (we include only two, adding Bt1.2/share, from its targeted six new projects in 2015-17). Downside is shielded by its six-month share repurchase up to Bt6bn (Bt1bn already repurchased), ending 24 Feb 2015, and its high committed dividend yield of 6-7% p.a. in FY2015-16F.
