BTS set for exciting times with aggressive step forward next year

Corporate December 11, 2014 01:00

By SASITHORN ONGDEE
THE NATION

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NEXT YEAR will be a crucial one for BTS Group Holdings, which will see earnings growth in its core business of mass transit while other entities covering advertising and services are expected to be able to raise funds from the public by themselves.



Chairman and chief executive officer Keeree Kanjanapas told The Nation that 2015 would be an exciting year for the group’s four main business units: mass transit, property, advertising, and services. 
“We have opportunities to take part in the bidding for more operations via extensions of the Green Line, and to announce more acquisition deals for property and advertising businesses next year,” he said.
After being relatively quiet for a few years, the BTS group is likely to take an aggressive step forward next year, given that the cloudy political situation is becoming clearer, he said. 
In regard to the mass-transit business, Keeree is confident there will be major progress in many projects, with extensions of the Green Line (Bearing-Mo Chit route) on track after having been implemented more slowly than expected.
Chief operating officer Surapong Laoha-Unya said it was possible that the group would win the operating contract for the extension of the Green Line for the 13-kilometre Bang Na-Suvarnabhumi stretch, running light rail transit (LRT) trains. 
The first phase will end at Thana City, where the Bangkok Metropolitan Administration (BMA) has the option on a 15-rai (2.4-hectare) plot to develop a depot for the route. 
BTS, via its subsidiary Bangkok Mass Transit System, currently operates a combined Green Line length of 37km. If it wins the right to operate the 7km extension from Bang Wa to Taling Chan, for which the BMA is expected to open the bidding for construction next year, BTS would operate a total of 44km of the Green Line, Keeree said. 
Apart from the LRT, also of interest to the group is the Grey Line, which in the first phase will run by monorail on the Watcharpol-Ekkamai-Ram Intra-Thong Lor section, while the second phase will be the Thong Lor-Sathorn- Chong Nonsi-Rama III route, said the company chief. 
“Though the mass-transit business has developed at a slower pace than expected, there is progress in a few areas,” he added. 
As for property business, Keeree said BTS had made the right decision in tying up with a leading developer, Natural Park (N-Park). 
Last month, the companies announced an agreement on setting up a 50:50 joint venture to develop condominium projects, with more than Bt3 billion worth of investment along the mass-transit electric rail lines, or within a 500-metre radius of stations. 
“We have to wait for a decision by listed property developer Natural Park’s shareholders at their meeting by the end of this month, as to what extent BTS will be allowed to hold N-Park’s equity,” he said. 
Under the terms of the acquisition deal, BTS in the initial stage is limited to holding N-Park stock in a range of 35-37 per cent of the equity.
“I expect our property business will be more aggressive, as it’s the right time to move forward ... If the deal is successful, the properties under development by N-Park will be for rent,” Keeree said. 
As for BTS’s advertising business, operated via a subsidiary and listed indoor and outdoor advertising provider VGI Global Media, Keeree said the unit was growing well. 
However, its high price-to-earnings ratio might mean it has to seek more merger and acquisition deals in order to expand profits and lower the ratio, he added. 
Meanwhile, BTS’s services business receives income in the form of hotel-management fees under the East-In and U Hotel and Resort brands, while the Rabbit smart card is also doing well. 
There are now some 3 million holders of the Rabbit Card, which is a smart cash card used for paying for Skytrain tickets and at more than 2,000 restaurants and other food outlets. 
 
Common ticketing
Surapong said BTS had recently won the installation contract for a common ticketing system from the Office of Transport and Traffic Policy and Planning, and that the company was expected to sign an agreement with the agency soon. 
Those who hold a common ticket will be able to ride on buses, trains, boats and the expressway system. 
“This will be an opportunity for us to participate in bidding for the ticket operation and, if we are successful, it will extend the Rabbit Card business,” he said, adding that the group expected to reach 3.5 million Rabbit cardholders next year. 
“While it cannot be said we are satisfied, there are no complaints so far,” Keeree said when asked about the progress of BTS’s business units. However, he reiterated that 2015 would be a crucial year for the group, and one during which it may start considering listing its train-operation and services businesses on the stock market. 
BTS posted Bt12.64 billion in net profit on revenue of Bt23.92 billion for its 2013 operational year, ending last March.
The figures are sharply up on Bt2.49 billion and Bt6.72 billion, respectively, a year earlier.