September 27, 2018 OUTPERFORM n BTS Group Holdings (BTS TB) Share Price: Bt9.35 Target Price: Bt10.50 (+12.3%) Taking to the skies with BTS sky train . Expect 20% p.a. core profit growth (3-year CAGR) up to FY21F Initial Coverage led by organic growth, Green Line Extension, Pink and Yellow lines, and strong profit contribution from VGI (+25% p.a.) CH | CH . Potential upside from High-Speed Rail project to link 3 airports and new concession to manage the entire Green Line after 2029 . OUTPERFORM, Bt10.50 TP; upside risk from new concessions, a growing digital economy, and inorganic growth Back to growth stage after four years of flat growth BTS, a conglomerate involved in mass transit projects, is a familiar name for investors who ride the Skytrain to Bangkok CBD during rush hour. BTS’s earnings growth has been flat since FY14 because they had sold net farebox revenue from core network (23.5 km) to BTSGIF in FY14. BTS has 33% stake at BTSGIF. The company also did not find suitable investments to fill the earnings vacuum due to delays in the auction of new mass transit lines. However, BTS has secured 95.7 km of four new COMPANY RESEAR COMPANY Sunthorn THONGTHIP mass transit line projects under both gross-cost and net-cost in the past 662 - 659 7000 ext 5009 two years. These projects will be completed in FY19-21. VGI, a subsidiary
[email protected] involved in the media business, targets to grow profit by 33% p.a. (vs our estimate of 25%) to Bt2bn by FY21F led by an expanding BTS mass Key Data transit network and synergies with Rabbit’s and Kerry’s platforms.