Bangkok Expressway and Metro
Bangkok Expressway and Metro Outperform (17E TP Bt8.60)
Company Update
Close Bt7.75
Transport & Logistics November 11, 2016
Earnings upgrade/Earnings downgrade/Overview unchanged
Better performance of mass transit business in 3Q16 Price Performance (%)
Better‐than‐expected 3Q16 net profit BEM delivered net profit of Bt808mn in 3Q16, ‐46% YoY but +60% QoQ, 15% better than both our expectation and the street estimate, owing to better‐than‐expected revenue and gross profit margin, mainly from the mass transit business (IBL vs. O&M revenue from the Purple Line). Stripping out extra item booked in 3Q15 (gain from investment sold of Bt1.0bn after tax) and 2Q16 (loan prepayment fee of Bt170mn after tax), BEM’s earnings increased by 52% YoY and 20% QoQ. BEM recorded revenue of Bt3.4bn, 3% higher than our expectation owing to higher‐ than‐expected O&M revenue from the Purple Line. Meanwhile, its GPM of 41% was also higher than our expectation of 38% owing to the better GPM of the mass transit business to 22%, vs. 7% in 3Q15 and 14% in 2Q16.
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
0.178
0.240
KT ZMICO vs. consensus Share data
‐4.5%
0%
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 (%)
118.00/3,371.00 49.00/11.69 8.90/4.90 149,663.00 4.72
Estimated free float (%)
55.55
Beta
1.08
URL
www.bemplc.co.th
CGR
Anti‐corruption
n.a.
Raenoo Bhandasukdi Analyst, no 17989 [email protected] 66 (0) 2695‐5836
Slightly revise up TP to Bt8.60; maintain “Outperform” After reporting better‐than‐expected results in 3Q16, we revise up BEM’s earnings in 2016‐17E by 5%. The slightly revised up SOTP‐based target price to Bt8.60, vs. Bt8.50 previously, is based on the best‐case scenario (extending IBL’s concession for 20 years and being awarded the Blue Line MRT extension concession for a 30‐year period). We thus maintain our “Outperform” rating for BEM as the negotiations for the Blue Line extension are likely to be finalized soon.
Traffic statistics slow in October BEM’s traffic volume growth in October was slow, both expressways and ridership, owing to long weekends and the mourning period (many activities have been cancelled). For 10M16, BEM reported expressway and ridership volume growth of +3.0% and +4.7%, respectively. Revise up earnings estimates in 2016‐17E by 5% We lower BEM’s expressway volume growth in 2016E to 4% (vs. 4.6% previously) and ridership volume growth to 5% (vs. 7% previously). However, we upgrade the normalized profit estimates in 2016‐17E by 5% for both years to Bt2.8bn and Bt3.7bn to reflect the higher‐than‐ expected earnings in 3Q16, owing mainly to the better‐than‐expected GPM of the mass transit business. 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) – adj. BV (Bt) FY Ended 31 Dec Norm. PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 11,234 2,745 0.18 2,315 0.15 9.64 0.13 1.70 2014 51.17 19.53 4.55 1.63 10.51 76.02
2015 11,738 2,650 0.17 1,995 0.13 (13.84) 0.07 1.90 2015 59.39 22.06 4.08 0.90 7.24 120.17
2016E 13,248 2,650 0.17 2,820 0.18 41.35 0.09 1.99 2016E 42.01 20.55 3.89 1.12 9.48 122.27
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 16,201 3,695 0.24 3,695 0.24 31.06 0.13 2.11 2017E 32.06 15.42 3.67 1.65 11.78 101.30
2018E 17,265 4,344 0.28 4,344 0.28 17.56 0.15 2.26 2018E 27.27 13.84 3.44 1.88 13.01 80.91
Figure 1: Summary of sum‐of‐the‐parts (SOTP) valuation for BEM Business Expressways Mass Rapid Transit Investment CKP TTW Minus ‐ net debt Future project Blue Line extensions SOTP‐based Source: KT ZMICO Research
Holding
Fair value
TP per BEM
(%) 19.40 19.45
(Btmn) 52,064 64,252 4,575 8,667 (32,722) 34,345 131,182
shares (Bt) 3.41 4.20 0.30 0.57 (2.14) 2.25 8.58
Valuation Method / Explanation Existing + SOE (DCF) IBL (concession period extended to 2049) + Purple Line (O&M) KTZ’s TP of Bt3.20 KTZ’s TP of Bt11.10
PPP Net cost, fare + commercial (DCF), 30‐year concession period
Figure 2: BEM’s traffic volume trend Oct‐15 Nov‐15 Dec‐15 Jan‐16 Feb‐16 Mar‐16 Apr‐16 May‐16 Jun‐16 Jul‐16 Aug‐16 Sep‐16 Oct‐16 Source: BEM
FES (0.6) 0.9 (0.1) 1.2 (1.0) 1.8 0.7 0.4 1.4 (0.9) 2.9 0.8 (2.3)
Expressway traffic volume growth (% YoY) SectorA SectorB SectorC SectorD SOE NECL (0.7) (0.1) 2.9 2.5 ‐ 7.0 0.1 0.2 4.0 3.5 ‐ 8.8 0.0 (2.5) 4.0 2.4 ‐ 7.6 1.2 0.4 4.9 4.8 ‐ 9.4 (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
Total 1.0 2.1 1.3 2.8 0.3 3.5 3.0 1.3 3.9 1.5 6.1 5.2 2.1
Ridership Growth 4.9 7.9 3.4 3.7 3.1 5.1 4.5 2.7 3.9 1.2 9.6 6.9 5.4
Expressway volume (‘000 trips/day) 1,150 1,191 1,144 1,142 1,180 1,217 1,104 1,130 1,178 1,154 1,205 1,218 1,174
Ridership volume (‘000 trips/day) 277 273 245 254 278 283 248 245 279 269 286 294 291
Figure 3: 3Q16 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
3Q15 2,953 1,172 (238) 1,799 (358) 45 (166) 988 87 1,519 531 0.10
2Q16 2,919 1,212 (242) 1,787 (275) 25 (146) (170) 102 504 674 0.03
3Q16 3,431 1,422 (290) 2,033 (296) 34 (171) ‐ 113 808 808 0.05
% YoY 16.2 21.3 21.7 13.0 (17.3) (25.6) 3.3 (100.0) 28.9 (46.8) 52.2 (46.8)
% QoQ 17.6 17.3 19.5 13.8 7.9 36.9 17.1 (100.0) 10.0 60.1 19.8 60.1
9M16 9,376 3,883 (765) 5,682 (849) 92 (479) (170) 308 2,014 2,184 0.13
39.7 60.9 18.0 n.a. 2.6 n.a. n.a. n.a.
41.5 61.2 23.1 0.4 3.5 1.5 1.9 9.2
41.4 59.3 23.5 0.3 3.8 1.5 1.9 11.1
41.4 60.6 23.3 0.3 3.7 1.5 1.9 10.0
% YoY 7.4 10.8 2.8 8.6 (23.4) (11.7) 5.9 (117.2) (10.7) (22.3) 36.1 (22.3)
2016E 13,248 5,258 (1,213) 7,578 (1,163) 128 (619) (170) 428 2,650 2,820 0.17
YTD (% of 16E) 70.8 73.8 63.0 75.0 73.0 71.5 77.4 100.0 71.9 76.0 77.5 76.0
39.7 57.2 21.3 0.2 3.5 1.4 2.0 9.5
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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 (%)
2014 11,234 (6,556) 4,677 (923) 7,081 (3,327) 3,754 (1,437) 113 2,430 (595) 429 546 (66) 2,745 0.18 0.18 2,315 0.15 0.13
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
2016E 13,248 (7,989) 5,258 (1,213) 7,578 (3,533) 4,045 (1,163) 128 3,010 (619) (170) 428 (2) 2,650 0.17 0.17 2,820 0.18 0.09
2014 4,725 0 52,749 12,552 70,026 5,354 28,473 43,817 157 26,052 70,025
2015 4,981 0 58,261 14,878 78,120 22,529 17,354 48,990 86 29,044 78,120
2016E 5,429 0 60,975 14,665 81,069 22,477 20,187 50,530 86 30,453 81,069
2014 2,745 3,144 (594) (285) 5,010 (7,128) 0 (7,128) 4,966 0 (1,309) 3,657 1,539 (2,118) (0.14)
2015 2,650 3,271 (1,674) (953) 3,293 (4,758) 0 (4,758) 5,495 0 (1,925) 3,570 2,106 (1,464) (0.10)
2016E 2,650 3,410 (1,525) (428) 4,108 (5,370) 0 (5,370) 2,781 0 (1,070) 1,711 449 (1,262) (0.08)
2014 n.a. n.a. n.a. 41.6 63.0 33.4 24.4 20.6 20.0
2015 4.5 (1.8) (13.8) 39.6 59.2 30.1 22.6 17.0 18.4
2016E 12.9 9.0 41.4 39.7 57.2 30.5 20.0 21.3 20.6
2017E 16,201 (9,234) 6,967 (1,327) 9,802 (4,162) 5,640 (1,632) 145 4,153 (895) 0 437 (3) 3,695 0.24 0.24 3,695 0.24 0.13 2017E 5,298 0 57,269 14,743 77,310 17,834 20,187 44,923 86 32,301 77,310 2017E 3,695 4,138 (1,154) (437) 6,243 (405) 0 (405) (4,643) 0 (1,325) (5,968) (131) 5,838 0.38 2017E 22.3 29.4 31.1 43.0 60.5 34.8 22.8 22.8 21.6
2018E 17,265 (9,597) 7,668 (1,396) 10,576 (4,304) 6,272 (1,524) 154 4,902 (1,052) 0 494 (4) 4,344 0.28 0.28 4,344 0.28 0.15 2018E 6,121 0 53,730 14,307 74,157 13,825 20,187 39,598 86 34,473 74,158 2018E 4,344 4,362 (1,032) (494) 7,180 (400) 0 (400) (4,008) 0 (1,949) (5,958) 822 6,780 0.44 2018E 6.6 7.9 17.6 44.4 61.3 36.3 25.2 25.2 21.5
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, PACE, TPOLY, M‐CHAI, TFD, SUTHA. KT ZMICO is a co‐underwriter of RJH, BCPG, ITEL, SQ, ALLA.
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 Bt7.75
Transport & Logistics November 11, 2016
Earnings upgrade/Earnings downgrade/Overview unchanged
Better performance of mass transit business in 3Q16 Price Performance (%)
Better‐than‐expected 3Q16 net profit BEM delivered net profit of Bt808mn in 3Q16, ‐46% YoY but +60% QoQ, 15% better than both our expectation and the street estimate, owing to better‐than‐expected revenue and gross profit margin, mainly from the mass transit business (IBL vs. O&M revenue from the Purple Line). Stripping out extra item booked in 3Q15 (gain from investment sold of Bt1.0bn after tax) and 2Q16 (loan prepayment fee of Bt170mn after tax), BEM’s earnings increased by 52% YoY and 20% QoQ. BEM recorded revenue of Bt3.4bn, 3% higher than our expectation owing to higher‐ than‐expected O&M revenue from the Purple Line. Meanwhile, its GPM of 41% was also higher than our expectation of 38% owing to the better GPM of the mass transit business to 22%, vs. 7% in 3Q15 and 14% in 2Q16.
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
0.178
0.240
KT ZMICO vs. consensus Share data
‐4.5%
0%
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 (%)
118.00/3,371.00 49.00/11.69 8.90/4.90 149,663.00 4.72
Estimated free float (%)
55.55
Beta
1.08
URL
www.bemplc.co.th
CGR
Anti‐corruption
n.a.
Raenoo Bhandasukdi Analyst, no 17989 [email protected] 66 (0) 2695‐5836
Slightly revise up TP to Bt8.60; maintain “Outperform” After reporting better‐than‐expected results in 3Q16, we revise up BEM’s earnings in 2016‐17E by 5%. The slightly revised up SOTP‐based target price to Bt8.60, vs. Bt8.50 previously, is based on the best‐case scenario (extending IBL’s concession for 20 years and being awarded the Blue Line MRT extension concession for a 30‐year period). We thus maintain our “Outperform” rating for BEM as the negotiations for the Blue Line extension are likely to be finalized soon.
Traffic statistics slow in October BEM’s traffic volume growth in October was slow, both expressways and ridership, owing to long weekends and the mourning period (many activities have been cancelled). For 10M16, BEM reported expressway and ridership volume growth of +3.0% and +4.7%, respectively. Revise up earnings estimates in 2016‐17E by 5% We lower BEM’s expressway volume growth in 2016E to 4% (vs. 4.6% previously) and ridership volume growth to 5% (vs. 7% previously). However, we upgrade the normalized profit estimates in 2016‐17E by 5% for both years to Bt2.8bn and Bt3.7bn to reflect the higher‐than‐ expected earnings in 3Q16, owing mainly to the better‐than‐expected GPM of the mass transit business. 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) – adj. BV (Bt) FY Ended 31 Dec Norm. PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 11,234 2,745 0.18 2,315 0.15 9.64 0.13 1.70 2014 51.17 19.53 4.55 1.63 10.51 76.02
2015 11,738 2,650 0.17 1,995 0.13 (13.84) 0.07 1.90 2015 59.39 22.06 4.08 0.90 7.24 120.17
2016E 13,248 2,650 0.17 2,820 0.18 41.35 0.09 1.99 2016E 42.01 20.55 3.89 1.12 9.48 122.27
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 16,201 3,695 0.24 3,695 0.24 31.06 0.13 2.11 2017E 32.06 15.42 3.67 1.65 11.78 101.30
2018E 17,265 4,344 0.28 4,344 0.28 17.56 0.15 2.26 2018E 27.27 13.84 3.44 1.88 13.01 80.91
Figure 1: Summary of sum‐of‐the‐parts (SOTP) valuation for BEM Business Expressways Mass Rapid Transit Investment CKP TTW Minus ‐ net debt Future project Blue Line extensions SOTP‐based Source: KT ZMICO Research
Holding
Fair value
TP per BEM
(%) 19.40 19.45
(Btmn) 52,064 64,252 4,575 8,667 (32,722) 34,345 131,182
shares (Bt) 3.41 4.20 0.30 0.57 (2.14) 2.25 8.58
Valuation Method / Explanation Existing + SOE (DCF) IBL (concession period extended to 2049) + Purple Line (O&M) KTZ’s TP of Bt3.20 KTZ’s TP of Bt11.10
PPP Net cost, fare + commercial (DCF), 30‐year concession period
Figure 2: BEM’s traffic volume trend Oct‐15 Nov‐15 Dec‐15 Jan‐16 Feb‐16 Mar‐16 Apr‐16 May‐16 Jun‐16 Jul‐16 Aug‐16 Sep‐16 Oct‐16 Source: BEM
FES (0.6) 0.9 (0.1) 1.2 (1.0) 1.8 0.7 0.4 1.4 (0.9) 2.9 0.8 (2.3)
Expressway traffic volume growth (% YoY) SectorA SectorB SectorC SectorD SOE NECL (0.7) (0.1) 2.9 2.5 ‐ 7.0 0.1 0.2 4.0 3.5 ‐ 8.8 0.0 (2.5) 4.0 2.4 ‐ 7.6 1.2 0.4 4.9 4.8 ‐ 9.4 (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
Total 1.0 2.1 1.3 2.8 0.3 3.5 3.0 1.3 3.9 1.5 6.1 5.2 2.1
Ridership Growth 4.9 7.9 3.4 3.7 3.1 5.1 4.5 2.7 3.9 1.2 9.6 6.9 5.4
Expressway volume (‘000 trips/day) 1,150 1,191 1,144 1,142 1,180 1,217 1,104 1,130 1,178 1,154 1,205 1,218 1,174
Ridership volume (‘000 trips/day) 277 273 245 254 278 283 248 245 279 269 286 294 291
Figure 3: 3Q16 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
3Q15 2,953 1,172 (238) 1,799 (358) 45 (166) 988 87 1,519 531 0.10
2Q16 2,919 1,212 (242) 1,787 (275) 25 (146) (170) 102 504 674 0.03
3Q16 3,431 1,422 (290) 2,033 (296) 34 (171) ‐ 113 808 808 0.05
% YoY 16.2 21.3 21.7 13.0 (17.3) (25.6) 3.3 (100.0) 28.9 (46.8) 52.2 (46.8)
% QoQ 17.6 17.3 19.5 13.8 7.9 36.9 17.1 (100.0) 10.0 60.1 19.8 60.1
9M16 9,376 3,883 (765) 5,682 (849) 92 (479) (170) 308 2,014 2,184 0.13
39.7 60.9 18.0 n.a. 2.6 n.a. n.a. n.a.
41.5 61.2 23.1 0.4 3.5 1.5 1.9 9.2
41.4 59.3 23.5 0.3 3.8 1.5 1.9 11.1
41.4 60.6 23.3 0.3 3.7 1.5 1.9 10.0
% YoY 7.4 10.8 2.8 8.6 (23.4) (11.7) 5.9 (117.2) (10.7) (22.3) 36.1 (22.3)
2016E 13,248 5,258 (1,213) 7,578 (1,163) 128 (619) (170) 428 2,650 2,820 0.17
YTD (% of 16E) 70.8 73.8 63.0 75.0 73.0 71.5 77.4 100.0 71.9 76.0 77.5 76.0
39.7 57.2 21.3 0.2 3.5 1.4 2.0 9.5
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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 (%)
2014 11,234 (6,556) 4,677 (923) 7,081 (3,327) 3,754 (1,437) 113 2,430 (595) 429 546 (66) 2,745 0.18 0.18 2,315 0.15 0.13
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
2016E 13,248 (7,989) 5,258 (1,213) 7,578 (3,533) 4,045 (1,163) 128 3,010 (619) (170) 428 (2) 2,650 0.17 0.17 2,820 0.18 0.09
2014 4,725 0 52,749 12,552 70,026 5,354 28,473 43,817 157 26,052 70,025
2015 4,981 0 58,261 14,878 78,120 22,529 17,354 48,990 86 29,044 78,120
2016E 5,429 0 60,975 14,665 81,069 22,477 20,187 50,530 86 30,453 81,069
2014 2,745 3,144 (594) (285) 5,010 (7,128) 0 (7,128) 4,966 0 (1,309) 3,657 1,539 (2,118) (0.14)
2015 2,650 3,271 (1,674) (953) 3,293 (4,758) 0 (4,758) 5,495 0 (1,925) 3,570 2,106 (1,464) (0.10)
2016E 2,650 3,410 (1,525) (428) 4,108 (5,370) 0 (5,370) 2,781 0 (1,070) 1,711 449 (1,262) (0.08)
2014 n.a. n.a. n.a. 41.6 63.0 33.4 24.4 20.6 20.0
2015 4.5 (1.8) (13.8) 39.6 59.2 30.1 22.6 17.0 18.4
2016E 12.9 9.0 41.4 39.7 57.2 30.5 20.0 21.3 20.6
2017E 16,201 (9,234) 6,967 (1,327) 9,802 (4,162) 5,640 (1,632) 145 4,153 (895) 0 437 (3) 3,695 0.24 0.24 3,695 0.24 0.13 2017E 5,298 0 57,269 14,743 77,310 17,834 20,187 44,923 86 32,301 77,310 2017E 3,695 4,138 (1,154) (437) 6,243 (405) 0 (405) (4,643) 0 (1,325) (5,968) (131) 5,838 0.38 2017E 22.3 29.4 31.1 43.0 60.5 34.8 22.8 22.8 21.6
2018E 17,265 (9,597) 7,668 (1,396) 10,576 (4,304) 6,272 (1,524) 154 4,902 (1,052) 0 494 (4) 4,344 0.28 0.28 4,344 0.28 0.15 2018E 6,121 0 53,730 14,307 74,157 13,825 20,187 39,598 86 34,473 74,158 2018E 4,344 4,362 (1,032) (494) 7,180 (400) 0 (400) (4,008) 0 (1,949) (5,958) 822 6,780 0.44 2018E 6.6 7.9 17.6 44.4 61.3 36.3 25.2 25.2 21.5
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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, PACE, TPOLY, M‐CHAI, TFD, SUTHA. KT ZMICO is a co‐underwriter of RJH, BCPG, ITEL, SQ, ALLA.
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
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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
