BTS expects 200% surge in operating revenue in 2018/19, chiefly driven by recently secured mass transit lines The new lines are a catalyst and foundation for future multi-year growth, as BTS extracts additional value through its ancillary businesses there

Stocks and Financial Services Press Releases Tuesday April 10, 2018 14:25
Bangkok--10 Apr--IR PLUS

BTS expects 200% surge in operating revenue in 2018/19, chiefly driven by recently secured mass transit lines The new lines are a catalyst and foundation for future multi-year growth, as BTS extracts additional value through its ancillary businesses there

In its announcement of its 2018/19 plan on 9 April 2018, BTS Group Holdings PCL (BTS) expects operating revenue to surge by up to 200%, chiefly from its Mass Transit business. The full opening of the Green Line Southern Extension in December 2018 will not only boost Operation and Maintenance (O&M) revenue by 30% from the previous year, but feed ridership into the Core Network. The combined railway network under BTS will rise to 48.9 kilometres and 43 stations from 38.1 kilometres and 35 stations currently, by March 2019.

Kavin Kanjanapas, Chief Executive Officer of BTS Group Holdings PCL (BTS), added that "this year will be an important milestone for BTS that has long been anticipated by shareholders, investors and patrons. The developments we expect this year will be a catalyst for a multi-year period of unprecedented growth for BTS. This growth not only pertains to our mass transit business, but also to our complementary businesses in Media and Property that are poised to extract additional layers of value from the rollout of new mass transit lines we've secured.

BTS' Mass Transit business will recognise several channels of growth such as 20-25 billion Baht in expected revenue from the construction of the Pink (Min Buri-Khae Rai) and Yellow Lines (Lat Phrao-Samrong). The two lines, operated by BTS, and developed together with Sino-Thai Engineering & Construction PCL (STEC) and Ratchaburi Electricity Generating Holding PCL (RATCH) were awarded the concessions of both lines in June 2017. Additional income of 7-9 billion Baht is expected from the procurement of trains for the Green Line Extensions as well as Electrical and Mechanical (E&M) system installation services for the new Green Line Southern and the Northern (Mo Chit-Khu Khot) extensions. BTS also expects to recognise interest income of 600-700 million Baht related to the procurement of trains for Green Line's Extensions and the construction of Pink Line and Yellow Line.

Core Network Ridership is expected to grow by 4-5% from the previous year. Within the first 11 months of financial year 2017/18, BTS network served 220.3 million passengers or 743,027 passengers per weekday. Organic growth on the network will be further boosted by the official launch of the entirety of the Green Line's 12.6-kilometre Southern extension from Bearing to Samut Prakan. The nine stations of the Southern extension are expected to be officially opened in December 2018 and will significantly supplement revenue to BTS and feed ridership into BTS' network in the last quarter of 2018/19. Ridership growth on the Core Network continues to be fuelled by property development along mass transit stations, worsening road congestion and urbanisation in Greater Bangkok and adjacent provinces. Total O&M Revenue is targeted to soar by 30% from the previous year largely from the aforesaid full commencement of the Green Line Southern extension.

BTS' Media business under VGI Global Media PCL (VGI) will continue to aggressively expand its out-of-home media (OOH) presence. VGI is also poised to benefit from the ongoing economic recovery and emerging synergies with Rabbit Group through Online-to-Offline (O2O) media. Following a slew of acquisitions, VGI is now a comprehensive media solutions provider that is better-able to respond to contemporary lifestyles of consumers and offer more targeted advertising on behalf of its clients. Media revenue in 2018/19 is targeted to reach 4.4-4.6 billion Baht. VGI targets an EBITDA margin of 40-45% and net profit margin of 20-25%.

This year the majority of the Property business of BTS was transferred to an associate company, U City PCL (U City). Going forward, U City is the designated property development vehicle for BTS Group. U City has undergone restructuring and significant expansion following acquisitions of a hotel business in Europe and office buildings in the United Kingdom. U City expects to record revenues of 6-7 billion Baht this year, with an EBITDA margin of at least 25%.

The total expected capital expenditure (CAPEX) is estimated at 27-34 billion Baht this year. More than 90 of the amount or 26-32 billion Baht, is earmarked for investments in the above-mentioned mass transit lines. The remaining difference of 1.1 billion Baht and 400 million Baht will go to support growth in the Media and Property businesses, respectively.

"Though our CAPEX outlay is considerable, we've been preparing for this moment for several years. BTS has considerable and adequate capacity to finance these investments through a multitude of options. We expect to continue to simultaneously pay competitive, regular dividends vis-à-vis our SET50 peers to reward shareholders for their trust and support" says Mr Kanjanapas.

*financial year end March 2019

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