Kavin Kanjanapas
Kavin Kanjanapas

BTS eyes 200% jump in operating revenue

Corporate April 11, 2018 01:00

By The Nation

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BTS Group Holdings Plc (BTS) expects operating revenue to surge by up to 200 per cent for the 2018 fiscal year, chiefly from its mass transit business, chief executive officer Kavin Kanjanapas said yesterday. 

He said the full opening of the Green Line southern extension in December this year would not only boost operation and maintenance (O&M) revenue by 30 per cent from the previous year, but feed passengers into the core transport 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 said that this year would mark a milestone for BTS that has long been anticipated by shareholders, investors and patrons.

“The developments that the company expects this year will be a catalyst for a multi-year period of unprecedented growth for BTS,” he said.

“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 it’s secured.”

 BTS' mass transit business will recognise several channels of growth such as Bt20 billion and Bt25 billion 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 Plc (STEC) and Ratchaburi Electricity Generating Holding Plc (RATCH), which were awarded the concessions for both lines in June 2017. Additional income of Bt7 to Bt9 billion 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 northern (Mo Chit-Khu Khot) extensions. BTS also expects to recognise interest income of Bt600 to Bt700 million related to the procurement of trains for the Green Line extensions and the construction of the Pink and Yellow lines. 

The number of passengers on what the company calls its core network is expected to grow by 4-5 per cent from the previous year. Within the first 11 months of the 2017-18 financial year, the BTS network served 220.3 million passengers, with an average of 743,027 on weekdays. 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 passengers into BTS' network in the last quarter of 2018-19. Growth in passenger numbers 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, Kavin said. Total O&M revenue is targeted to soar by 30 per cent from the previous year largely from the full operation of the Green Line Southern extension. 

For the first nine months of fiscal 2017-18 (from April 1 to December 31, 2017; the fiscal year ended on March 31), the company announced total revenue of Bt11.8 billion and net profit Bt1.94 billion. 

BTS' media business under VGI Global Media Plc (VGI) will continue to aggressively expand its out-of-home media (OOH) presence, the company said. VGI is also poised to benefit from the ongoing economic recovery and emerging synergies with Rabbit Group through online-to-offline (O2O) media.

Kavin said that following a slew of acquisitions, VGI is now a comprehensive media solutions provider that is better able to respond to the contemporary lifestyles of consumers and offer more targeted advertising on behalf of its clients. Media revenue in 2018-19 is targeted to reach up to Bt4.6 billion. VGI targets an earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin of 40-45 per cent and net profit margin of 20-25 per cent.

This year the majority of the property business of BTS was transferred to an associate company, U City PCL (U City). 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 Bt6 billion and Bt7 billion this year, with an EBITDA margin of at least 25 per cent. 

The total expected capital expenditure (CAPEX) is estimated at between Bt27 billion and Bt34 billion this year. More than 90 per cent of the amount - or between Bt26 billion and Bt32 billion - is earmarked for investments in the mass transit lines. Of the balance, Bt1.1 billion and Bt400 million will be allocated 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,” Kavin said. “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-a-vis our SET 50 Index peers to reward shareholders for their trust and support.”