Bangkok Expressway and Metro
Bangkok Expressway and Metro Outperform (17E TP Bt8.20)
Company Update
Close Bt7.15
Transport & Logistics February 23, 2017
Earnings upgrade/Earnings downgrade/Overview unchanged
Below target traffic growth Price Performance (%)
Maintain “Outperform” with TP lowered to Bt8.20 Based on the downward revision of traffic volume, we lower our earnings estimates for BEM, resulting in a lower SOTP‐based TP to Bt8.20, vs. Bt8.60 previously. BEM’s earnings are expected to achieve +23% CAGR in 2017‐18E owing to full‐year recognition of revenue from the SOE and Purple Line. Our TP is still based on the best‐case scenario (extending IBL’s concession for 20 years and being awarded the Blue Line extension concession for a 30‐year period). Maintain “Outperform” rating for BEM. 2016 results in line BEM reported net profit of Bt2.6bn in 2016, flat YoY, in line with our expectation, but slightly below the street estimate of Bt2.7bn. Stripping out the net extra loss of Bt139mn (debt prepayment fees and gains from investment), BEM delivered normalized profit of Bt2.7bn, jumping by 38% YoY owing mainly to the decline of interest expenses. 4Q16 earnings fell QoQ For 4Q16, BEM posted normalized profit of Bt561mn, +44% YoY, ‐31% QoQ. On a yearly basis, earnings improved owing mainly to the revenue increase from the start of commercial operations of the SOE expressway and O&M revenue from the Purple Line mass transit in Aug‐16. On a quarterly basis, earnings fell owing to a GPM drop, mainly from the mass transit business, higher SG&A expenses, and higher interest expenses due to the full commercial operation of the SOE expressway.
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
0.243
0.291
KT ZMICO vs. consensus Share data
‐9.5%
‐7.2%
Reuters / Bloomberg
BEM.BK/ BEM TB
Paid‐up Shares (m)
15,285.00
Par (Bt)
1.00
Market cap (Bt bn / US$ m) Foreign limit / actual (%) 52 week High / Low (Bt) Avg. daily T/O (shares 000) NVDR (%)
109.00/3,121.00 49.00/10.68 8.90/5.10 124,775.00 5.04
Estimated free float (%)
55.55
Beta
1.17
URL
www.bemplc.co.th
CGR
Anti‐corruption
n.a.
Raenoo Bhandasukdi Analyst, no 17989 [email protected] 66 (0) 2695‐5836
Revise down SOE and ridership traffic statistics in 2017E In 2016, BEM’s expressway and ridership traffic grew by 3.1% and 5.1%, respectively. The SOE’s vehicle volume per day started at 35k in Sep‐16 and was maintained at around 43‐45k between Nov‐16 to Jan‐17, below BEM’s guidance of 80k and our expectation of 60k. IBL’s ridership volume in 2017E is also being impacted by the weak traffic connecting from the Purple Line. As a result, we lower expressway and ridership volume growth in 2017E to +6% and +7.0%, respectively, vs. +8% and +10% previously expected. Lower earnings estimates in 2017‐18E by 7% and 4% Based on the lower assumptions for traffic volume as mentioned above, we revise down our net profit estimates in 2017‐18E for BEM by 7% and 4% to Bt3.4bn and Bt4.2bn, respectively. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) Norm. profit (Btmn) Norm. EPS (Bt) Norm. EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec Norm. PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
2015 11,738 2,650 0.17 1,995 0.13 (13.84) 0.07 1.90 2015 56.32 21.18 3.87 0.95 7.24 120.08
2016 13,104 2,606 0.17 2,744 0.18 37.58 0.11 1.94 2016 40.94 20.03 3.78 1.50 9.35 135.35
2017E 15,238 3,429 0.22 3,429 0.22 24.93 0.16 2.02 2017E 32.77 16.30 3.64 2.22 11.32 107.63
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2018E 16,528 4,154 0.27 4,154 0.27 21.15 0.19 2.12 2018E 27.05 14.35 3.47 2.53 13.13 91.83
2019E 17,754 4,685 0.31 4,685 0.31 12.79 0.22 2.23 2019E 23.98 13.14 3.30 2.95 14.11 78.03
Figure 1: Summary of sum‐of‐the‐parts (SOTP) valuation for BEM Business
Holding
Fair value
TP per BEM
(%) 19.40 19.45
(Btmn) 45,047 67,732 5,290 8,614 (32,890) 31,808 125,603
shares (Bt) 2.95 4.43 0.35 0.56 (2.15) 2.08 8.22
Expressways Mass Rapid Transit Investment CKP TTW Minus ‐ net debt Future project Blue Line extensions SOTP‐based
Valuation Method / Explanation Existing + SOE (DCF) IBL (concession period extended to 2049) + Purple Line (O&M) KTZ’s TP of Bt3.70 KTZ’s TP of Bt11.10
PPP Net cost, fare + commercial (DCF), 30‐year concession period
Source: KT ZMICO Research
Figure 2: 4Q16 earnings review Profit and Loss (Btmn) Year‐end 31 Dec Revenue Gross profit SG&A expenses EBITDA Interest expenses Other income Income tax Other extra items Gn (Ls) from affiliates Net profit (loss) Normalized profit (loss) Reported EPS (Bt) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt/equity (x) BVPS (Bt) ROE (%) Source: BEM, KT ZMICO Research
4Q15 3,004 1,138 (371) 1,568 (442) (34) (9) (333) 117 57 390 0.00
3Q16 3,431 1,422 (290) 2,033 (296) 34 (171) ‐ 113 808 808 0.05
4Q16 3,728 1,393 (366) 1,886 (427) 6 (84) 31 40 592 561 0.04
% YoY 24.1 22.4 (1.4) 20.2 (3.5) n.m. 791.9 n.m. (66.1) 946.7 43.7 946.7
% QoQ 8.7 (2.0) 26.3 (7.3) 44.2 n.m. (50.8) n.m. (64.8) (26.8) (30.6) (26.8)
2015 11,738 4,643 (1,115) 6,799 (1,551) 69 (462) 655 461 2,650 1,995 0.17
2016 13,104 5,276 (1,131) 7,568 (1,277) 98 (563) (139) 347 2,606 2,744 0.17
37.9 52.2 13.0 0.2 1.7 1.4 1.9 10.7
41.4 59.3 23.5 0.3 3.8 1.5 1.9 11.1
37.4 50.6 15.0 1.0 2.4 1.6 1.9 7.6
39.6 59.2 17.0 0.2 2.3 1.4 1.9 7.2
40.3 58.1 20.9 1.0 3.2 1.6 1.9 9.3
% YoY 11.6 13.6 1.4 11.3 (17.7) 41.3 21.9 (121.1) (24.7) (1.7) 37.6 (1.7)
Figure 3: BEM’s traffic volume trend Feb‐16 Mar‐16 Apr‐16 May‐16 Jun‐16 Jul‐16 Aug‐16 Sep‐16 Oct‐16 Nov‐16 Dec‐16 Jan‐17
FES (1.0) 1.8 0.7 0.4 1.4 (0.9) 2.9 0.8 (2.3) (1.3) (0.2) (0.9)
Expressway traffic volume growth (% YoY) SectorA SectorB SectorC SectorD SOE NECL (1.7) (1.6) 2.5 1.8 ‐ 6.8 1.9 2.0 5.7 6.1 ‐ 9.7 1.3 0.3 5.7 4.5 ‐ 11.9 (0.3) 0.0 2.5 3.0 ‐ 5.3 2.5 2.3 6.1 5.3 ‐ 14.6 (0.1) (1.4) 3.3 3.3 ‐ 13.1 3.9 3.4 5.5 7.7 ‐ 16.4 2.7 (1.5) (0.2) 5.3 ‐ 10.7 0.0 (4.3) (3.3) 0.6 ‐ 6.3 1.1 (3.2) (3.7) 2.0 ‐ 3.4 3.7 (1.2) (3.3) 5.1 ‐ 6.6 1.7 (3.4) (5.2) 3.0 ‐ 4.2
Total 0.3 3.5 3.0 1.3 3.9 1.5 6.1 5.2 2.1 3.2 5.0 3.4
Ridership Growth 3.1 5.1 4.5 2.7 3.9 1.2 9.6 6.9 5.4 6.2 8.0 7.3
Expressway volume (‘000 trips/day) 1,180 1,217 1,104 1,130 1,178 1,154 1,205 1,218 1,174 1,229 1,202 1,182
Source: BEM
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Ridership volume (‘000 trips/day) 278 283 248 245 279 269 286 294 291 290 264 274
Financial tables PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Extra Items Gain (loss) from affiliates Minority interests Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btm) Cash and equivalents Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Minority interests Shareholder equity Total liab. & shareholder equity CASH FLOW (Btm) Net income Depreciation & amortization Change in working capital FX, non‐cash adjustment & others Cash flow from operations Capex (Invest)/Divest Others Cash flow from investing Debt financing (repayment) Equity financing Dividend payment Cash flow from financing Net change in cash Free cash flow FCF per share (Bt) PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2015 11,738 (7,094) 4,643 (1,115) 6,951 (3,423) 3,528 (1,551) 69 2,046 (462) 655 461 (52) 2,650 0.17 0.17 1,995 0.13 0.07
2016 13,104 (7,828) 5,276 (1,131) 7,616 (3,471) 4,145 (1,277) 98 2,967 (563) (139) 347 (9) 2,606 0.17 0.17 2,744 0.18 0.09
2017E 15,238 (8,934) 6,304 (1,293) 8,931 (3,921) 5,010 (1,430) 123 3,703 (703) 0 437 (12) 3,429 0.22 0.22 3,429 0.22 0.16
2015 4,981 0 58,905 14,209 78,095 22,529 17,329 48,965 86 29,044 78,095
2016 6,718 0 60,160 15,908 82,786 6,783 40,120 53,003 93 29,689 82,786
2017E 8,484 0 56,871 13,814 79,169 21,562 20,187 48,179 85 30,906 79,169
2015 2,650 3,271 (805) (953) 4,162 (4,732) 0 (4,732) 5,469 0 (1,925) 3,544 2,974 (570) (0.04)
2016 2,606 3,423 (2,439) 255 3,845 (11,663) 0 (11,663) 5,079 0 (1,834) 3,245 (4,574) (7,819) (0.51)
2017E 3,429 3,885 2,125 (437) 9,001 (400) 0 (400) (5,154) 0 (1,681) (6,836) 1,765 8,601 0.56
2015 4.5 (1.8) (13.8) 39.6 59.2 30.1 22.6 17.0 18.4
2016 11.6 9.6 37.6 40.3 58.1 31.6 19.9 20.9 19.0
2017E 16.3 17.3 24.9 41.4 58.6 32.9 22.5 22.5 19.0
2018E 16,528 (9,361) 7,166 (1,369) 9,901 (4,104) 5,797 (1,414) 139 4,522 (852) 0 494 (15) 4,154 0.27 0.27 4,154 0.27 0.19 2018E 8,930 0 53,598 13,677 76,205 18,478 20,187 43,751 74 32,379 76,204 2018E 4,154 4,171 (1,409) (494) 6,421 (400) 0 (400) (3,083) 0 (2,492) (5,575) 446 6,021 0.39 2018E 8.5 10.9 21.2 43.4 59.9 35.1 25.1 25.1 18.8
2019E 17,754 (9,917) 7,836 (1,453) 10,570 (4,186) 6,383 (1,332) 112 5,164 (961) 0 494 (16) 4,685 0.31 0.31 4,685 0.31 0.22 2019E 3,372 0 51,578 14,034 68,984 10,831 19,103 34,881 62 34,041 68,984 2019E 4,685 4,344 (2,059) (494) 6,476 (460) 0 (460) (8,732) 0 (2,843) (11,575) (5,558) 6,016 0.39 2019E 7.4 6.8 12.8 44.1 59.5 36.0 26.4 26.4 18.6
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, M‐CHAI, TFD. KT ZMICO is a co underwriter of RPH.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
Company Update
Close Bt7.15
Transport & Logistics February 23, 2017
Earnings upgrade/Earnings downgrade/Overview unchanged
Below target traffic growth Price Performance (%)
Maintain “Outperform” with TP lowered to Bt8.20 Based on the downward revision of traffic volume, we lower our earnings estimates for BEM, resulting in a lower SOTP‐based TP to Bt8.20, vs. Bt8.60 previously. BEM’s earnings are expected to achieve +23% CAGR in 2017‐18E owing to full‐year recognition of revenue from the SOE and Purple Line. Our TP is still based on the best‐case scenario (extending IBL’s concession for 20 years and being awarded the Blue Line extension concession for a 30‐year period). Maintain “Outperform” rating for BEM. 2016 results in line BEM reported net profit of Bt2.6bn in 2016, flat YoY, in line with our expectation, but slightly below the street estimate of Bt2.7bn. Stripping out the net extra loss of Bt139mn (debt prepayment fees and gains from investment), BEM delivered normalized profit of Bt2.7bn, jumping by 38% YoY owing mainly to the decline of interest expenses. 4Q16 earnings fell QoQ For 4Q16, BEM posted normalized profit of Bt561mn, +44% YoY, ‐31% QoQ. On a yearly basis, earnings improved owing mainly to the revenue increase from the start of commercial operations of the SOE expressway and O&M revenue from the Purple Line mass transit in Aug‐16. On a quarterly basis, earnings fell owing to a GPM drop, mainly from the mass transit business, higher SG&A expenses, and higher interest expenses due to the full commercial operation of the SOE expressway.
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
0.243
0.291
KT ZMICO vs. consensus Share data
‐9.5%
‐7.2%
Reuters / Bloomberg
BEM.BK/ BEM TB
Paid‐up Shares (m)
15,285.00
Par (Bt)
1.00
Market cap (Bt bn / US$ m) Foreign limit / actual (%) 52 week High / Low (Bt) Avg. daily T/O (shares 000) NVDR (%)
109.00/3,121.00 49.00/10.68 8.90/5.10 124,775.00 5.04
Estimated free float (%)
55.55
Beta
1.17
URL
www.bemplc.co.th
CGR
Anti‐corruption
n.a.
Raenoo Bhandasukdi Analyst, no 17989 [email protected] 66 (0) 2695‐5836
Revise down SOE and ridership traffic statistics in 2017E In 2016, BEM’s expressway and ridership traffic grew by 3.1% and 5.1%, respectively. The SOE’s vehicle volume per day started at 35k in Sep‐16 and was maintained at around 43‐45k between Nov‐16 to Jan‐17, below BEM’s guidance of 80k and our expectation of 60k. IBL’s ridership volume in 2017E is also being impacted by the weak traffic connecting from the Purple Line. As a result, we lower expressway and ridership volume growth in 2017E to +6% and +7.0%, respectively, vs. +8% and +10% previously expected. Lower earnings estimates in 2017‐18E by 7% and 4% Based on the lower assumptions for traffic volume as mentioned above, we revise down our net profit estimates in 2017‐18E for BEM by 7% and 4% to Bt3.4bn and Bt4.2bn, respectively. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) Norm. profit (Btmn) Norm. EPS (Bt) Norm. EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec Norm. PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
2015 11,738 2,650 0.17 1,995 0.13 (13.84) 0.07 1.90 2015 56.32 21.18 3.87 0.95 7.24 120.08
2016 13,104 2,606 0.17 2,744 0.18 37.58 0.11 1.94 2016 40.94 20.03 3.78 1.50 9.35 135.35
2017E 15,238 3,429 0.22 3,429 0.22 24.93 0.16 2.02 2017E 32.77 16.30 3.64 2.22 11.32 107.63
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2018E 16,528 4,154 0.27 4,154 0.27 21.15 0.19 2.12 2018E 27.05 14.35 3.47 2.53 13.13 91.83
2019E 17,754 4,685 0.31 4,685 0.31 12.79 0.22 2.23 2019E 23.98 13.14 3.30 2.95 14.11 78.03
Figure 1: Summary of sum‐of‐the‐parts (SOTP) valuation for BEM Business
Holding
Fair value
TP per BEM
(%) 19.40 19.45
(Btmn) 45,047 67,732 5,290 8,614 (32,890) 31,808 125,603
shares (Bt) 2.95 4.43 0.35 0.56 (2.15) 2.08 8.22
Expressways Mass Rapid Transit Investment CKP TTW Minus ‐ net debt Future project Blue Line extensions SOTP‐based
Valuation Method / Explanation Existing + SOE (DCF) IBL (concession period extended to 2049) + Purple Line (O&M) KTZ’s TP of Bt3.70 KTZ’s TP of Bt11.10
PPP Net cost, fare + commercial (DCF), 30‐year concession period
Source: KT ZMICO Research
Figure 2: 4Q16 earnings review Profit and Loss (Btmn) Year‐end 31 Dec Revenue Gross profit SG&A expenses EBITDA Interest expenses Other income Income tax Other extra items Gn (Ls) from affiliates Net profit (loss) Normalized profit (loss) Reported EPS (Bt) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt/equity (x) BVPS (Bt) ROE (%) Source: BEM, KT ZMICO Research
4Q15 3,004 1,138 (371) 1,568 (442) (34) (9) (333) 117 57 390 0.00
3Q16 3,431 1,422 (290) 2,033 (296) 34 (171) ‐ 113 808 808 0.05
4Q16 3,728 1,393 (366) 1,886 (427) 6 (84) 31 40 592 561 0.04
% YoY 24.1 22.4 (1.4) 20.2 (3.5) n.m. 791.9 n.m. (66.1) 946.7 43.7 946.7
% QoQ 8.7 (2.0) 26.3 (7.3) 44.2 n.m. (50.8) n.m. (64.8) (26.8) (30.6) (26.8)
2015 11,738 4,643 (1,115) 6,799 (1,551) 69 (462) 655 461 2,650 1,995 0.17
2016 13,104 5,276 (1,131) 7,568 (1,277) 98 (563) (139) 347 2,606 2,744 0.17
37.9 52.2 13.0 0.2 1.7 1.4 1.9 10.7
41.4 59.3 23.5 0.3 3.8 1.5 1.9 11.1
37.4 50.6 15.0 1.0 2.4 1.6 1.9 7.6
39.6 59.2 17.0 0.2 2.3 1.4 1.9 7.2
40.3 58.1 20.9 1.0 3.2 1.6 1.9 9.3
% YoY 11.6 13.6 1.4 11.3 (17.7) 41.3 21.9 (121.1) (24.7) (1.7) 37.6 (1.7)
Figure 3: BEM’s traffic volume trend Feb‐16 Mar‐16 Apr‐16 May‐16 Jun‐16 Jul‐16 Aug‐16 Sep‐16 Oct‐16 Nov‐16 Dec‐16 Jan‐17
FES (1.0) 1.8 0.7 0.4 1.4 (0.9) 2.9 0.8 (2.3) (1.3) (0.2) (0.9)
Expressway traffic volume growth (% YoY) SectorA SectorB SectorC SectorD SOE NECL (1.7) (1.6) 2.5 1.8 ‐ 6.8 1.9 2.0 5.7 6.1 ‐ 9.7 1.3 0.3 5.7 4.5 ‐ 11.9 (0.3) 0.0 2.5 3.0 ‐ 5.3 2.5 2.3 6.1 5.3 ‐ 14.6 (0.1) (1.4) 3.3 3.3 ‐ 13.1 3.9 3.4 5.5 7.7 ‐ 16.4 2.7 (1.5) (0.2) 5.3 ‐ 10.7 0.0 (4.3) (3.3) 0.6 ‐ 6.3 1.1 (3.2) (3.7) 2.0 ‐ 3.4 3.7 (1.2) (3.3) 5.1 ‐ 6.6 1.7 (3.4) (5.2) 3.0 ‐ 4.2
Total 0.3 3.5 3.0 1.3 3.9 1.5 6.1 5.2 2.1 3.2 5.0 3.4
Ridership Growth 3.1 5.1 4.5 2.7 3.9 1.2 9.6 6.9 5.4 6.2 8.0 7.3
Expressway volume (‘000 trips/day) 1,180 1,217 1,104 1,130 1,178 1,154 1,205 1,218 1,174 1,229 1,202 1,182
Source: BEM
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Ridership volume (‘000 trips/day) 278 283 248 245 279 269 286 294 291 290 264 274
Financial tables PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Extra Items Gain (loss) from affiliates Minority interests Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btm) Cash and equivalents Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Minority interests Shareholder equity Total liab. & shareholder equity CASH FLOW (Btm) Net income Depreciation & amortization Change in working capital FX, non‐cash adjustment & others Cash flow from operations Capex (Invest)/Divest Others Cash flow from investing Debt financing (repayment) Equity financing Dividend payment Cash flow from financing Net change in cash Free cash flow FCF per share (Bt) PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2015 11,738 (7,094) 4,643 (1,115) 6,951 (3,423) 3,528 (1,551) 69 2,046 (462) 655 461 (52) 2,650 0.17 0.17 1,995 0.13 0.07
2016 13,104 (7,828) 5,276 (1,131) 7,616 (3,471) 4,145 (1,277) 98 2,967 (563) (139) 347 (9) 2,606 0.17 0.17 2,744 0.18 0.09
2017E 15,238 (8,934) 6,304 (1,293) 8,931 (3,921) 5,010 (1,430) 123 3,703 (703) 0 437 (12) 3,429 0.22 0.22 3,429 0.22 0.16
2015 4,981 0 58,905 14,209 78,095 22,529 17,329 48,965 86 29,044 78,095
2016 6,718 0 60,160 15,908 82,786 6,783 40,120 53,003 93 29,689 82,786
2017E 8,484 0 56,871 13,814 79,169 21,562 20,187 48,179 85 30,906 79,169
2015 2,650 3,271 (805) (953) 4,162 (4,732) 0 (4,732) 5,469 0 (1,925) 3,544 2,974 (570) (0.04)
2016 2,606 3,423 (2,439) 255 3,845 (11,663) 0 (11,663) 5,079 0 (1,834) 3,245 (4,574) (7,819) (0.51)
2017E 3,429 3,885 2,125 (437) 9,001 (400) 0 (400) (5,154) 0 (1,681) (6,836) 1,765 8,601 0.56
2015 4.5 (1.8) (13.8) 39.6 59.2 30.1 22.6 17.0 18.4
2016 11.6 9.6 37.6 40.3 58.1 31.6 19.9 20.9 19.0
2017E 16.3 17.3 24.9 41.4 58.6 32.9 22.5 22.5 19.0
2018E 16,528 (9,361) 7,166 (1,369) 9,901 (4,104) 5,797 (1,414) 139 4,522 (852) 0 494 (15) 4,154 0.27 0.27 4,154 0.27 0.19 2018E 8,930 0 53,598 13,677 76,205 18,478 20,187 43,751 74 32,379 76,204 2018E 4,154 4,171 (1,409) (494) 6,421 (400) 0 (400) (3,083) 0 (2,492) (5,575) 446 6,021 0.39 2018E 8.5 10.9 21.2 43.4 59.9 35.1 25.1 25.1 18.8
2019E 17,754 (9,917) 7,836 (1,453) 10,570 (4,186) 6,383 (1,332) 112 5,164 (961) 0 494 (16) 4,685 0.31 0.31 4,685 0.31 0.22 2019E 3,372 0 51,578 14,034 68,984 10,831 19,103 34,881 62 34,041 68,984 2019E 4,685 4,344 (2,059) (494) 6,476 (460) 0 (460) (8,732) 0 (2,843) (11,575) (5,558) 6,016 0.39 2019E 7.4 6.8 12.8 44.1 59.5 36.0 26.4 26.4 18.6
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Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, M‐CHAI, TFD. KT ZMICO is a co underwriter of RPH.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
