BTS GROUP HOLDINGS

BTS Group Holdings Plc (BTS)  

 

- Feasibility study on MRTA running Green Line without BMA's approval 

 

According to the board meeting on July 3, Yodyuth Boonyatikarn, board chairman of the Mass Rapid Transit Authority of Thailand (MRTA), revealed that the MRTA will conduct the feasibility study on operating the Green extension Line (Bearing – Samut Prakan) without approval from the Bangkok Metropolitan Administration (BMA) as Plan B in case that both the MRTA and the BMA cannot reach a mutual agreement. 

 

- BTS to win extension line bid 

 

The outcome of this issue is unpredictable and needs to be watched closely. According to the discussion between the MRTA and the BMA on June 28, 2015, the BMA is likely to be the one operating the Green Line extension. The difference between having the MRTA and the BMA operating the mass transit line is how long they would take to find a private operator for the extension line. If the MRTA win the line, it would be a public private partnership (PPP) deal like the Purple Line (Bang Sue – Bang Yai), of which the opening was delayed because the negotiation took a very long time. On the other hand, if the winner is the BMA, which is currently making a contract with BTS, the negotiation would be more flexible and take less time. No matter the outcome would go in favor of the MRTA or the BMA, BTS (the most competitive mass transit operator) would still be the operator of the extension line, which is only 13 km long and linked with the current Green Line under BTS's operation; this has been included in our forecast already. The construction of the railway was 58% complete as of end May 2015. 

 

- 6.7% dividend yield, 3.2% in 2H14/15 

 

BTS is among the land transportation sector's best choices under the current situation owing to its dividend yield of 6.7% in 2015 as well as its 2H14/15 dividend of B0.3/share or 3% (XD date is July 31; dividend will be paid on August 17). Although the period of minimum guaranteed dividend payment has ended, its dividend yield can still be expected at 4.2% (B0.42/share, or B5bn total dividend payment) thanks to its strong financial position and approximately over B15bn cash in hand at end 2015. SET Index is likely to drop today, so it would be a good entry point for BTS.