Keeree Kanjanapas, chairman and chief executive officer of BTS Group Holdings, said in an exclusive interview with The Nation that he would tone down his aggressiveness in business to avoid risks amid global fluctuation.
But he said: “We’re ready to take risk ... even if investment as high as Bt100 billion is required – if that is our core business. We believe in our competence.”
Keeree, who is 63, has started to think of “firmness” after having undergone a business rehabilitation since the financial crisis in 1997.
Both his firms – Thanayong, a property developer, and BTSC, operator of Bangkok’s elevated mass transit system (SkyTrain) – were bashed by a tsunami of mounting dollar debts. In those days, Keeree grew his business empire with an aggressive merger and acquisition strategy. He used foreign debt as part of his firm’s resources.
After two years and six months, Keeree finished sweeping out his home with clean debts. “Our business is quite clean,” he said. After Thanayong’s acquisition of BTSC was complete, the firm changed its name to BTS Group Holdings and was moved from the property sector on the stock exchange to transport and logistics.
To date, BTS Group Holdings, which increased and decreased capital on the way, has a total of 10.29 billion paid-up shares with a market capitalisation of nearly Bt60 billion. The Kanjanapas hold the biggest stake – 49 per cent – in the group.
Keeree said the group had four main businesses – mass transit, property, advertising and services. The mass transit business contributes about 65 per cent of total revenue, followed by advertising with 25 per cent, property about 10 per cent, and services a small amount. Last year [ending March 2012], the group posted consolidated earnings of nearly Bt8 billion.
“From now on, we will proceed step by step forward with confidence and firmness,” Keeree said.
The mass transit business was growing well, he said, with natural growth driven by urbanisation and more destinations of rail lines that would bring new malls and new property projects. These supported growth of the systems users. Currently, the BTS SkyTrain has 30 stations and it will add five more next year.
Keeree said the company had room to increase ticket prices from Bt15-40 per trip/person to Bt18.79-56.36. The Bangkok Metropolitan Administration had agreed to lift a ban on ticket prices. However, the company would try not to seek more costs from passengers soon. It would find other ways to increase income instead.
“Now, we are in [city] infrastructure. It will be 13 years on December 5 that we have operated BTS SkyTrain, marking a proven record that we can deliver services with convenience, safety, reliability and punctuality,” he said.
Currently, the SkyTrain has an average of 603,000 passengers per day, up 15 per cent year on year.
Keeree is now looking to cash in on the strong BTS brand. But he said the group would not diversify to any business not related to mass transit. “We’re looking for expansion in horizontal, not vertically integrated businesses, saying that we want more network or areas of our core business.”
Not surprisingly, he said the group would not invest in new property projects next year or new businesses outside the country. He said the property market could be oversupplied – but not all segments. “For BTS Group Holdings, it still generates income from existing property projects, especially condo projects under the ‘Abstracts’ brand, given an image of condos near electric trains.”
In advertising, BTS Group Holdings holds a majority stake in VGI Global Media, which listed its shares on the stock market on October 11. VGI is a provider of media and advertising services, mainly in modern trades and office buildings, and BTS cars. Last year, about 57 per cent of its Bt1.96 billion turnover came from BTS ad sales. The rest was from modern trades and office buildings.
Keeree said the services business which the group receives income from was for management fees under the East-In and U Hotel and Resort brands. It recently launched the “Rabbit” smart card. This card can pay for mass transit travel as well as food and beverages.
BTS stock closed on Friday at Bt5.65 a share, unchanged from the previous day.
KGI Securities (Thailand) reiterated in its latest research that it has BTS on a rating of Outperform and a 2012 fiscal year (April - March) target price of Bt7.20, based on its valuation. The broker said there was a bright outlook for mass transit [BTS’ core business] and media business [which BTS’ wholly-owned subsidiary VGI Global debuted the first trading day in October 11]. “We believe VGI’s IPO will be a key driver for BTS’ earnings and its share price in the near term. Based on VGI’s IPO price of Bt35 each, BTS will book extra gain of Bt1.6 billion in third quarter (October-December) this year,” it said.