BEM Cruises to “All-Time High” Expressway, KGI Points “Outperform” with TP at ฿11.10
After acquiring 37 years concession from EXAT, BEM's shares have hiked to an all-time high on December 24, 2018, while KGI gives a target price at ฿11.10/share.
The price of Bangkok Expressway and Metro Public Company Limited (BEM) is running on a highway to a continuously all-time high as the share reaches a new high at ฿10.10/share after the opening bell, then continues its gain to ฿10.20/share, making another new high. At 11:35, the share edges lower to ฿10.10/share.
Following the acquisition of 37 years concession on second stage expressway extension (Sirat Expressway Sector A, B and C), KGI Securities has given a 12-month target price of BEM at ฿11.10/share, while upgraded BEM from Neutral to Outperform.
In the agreement with Express Authority of Thailand (EXAT)’s boards, BEM is allowed to raise toll price by ฿10 every ten years. KGI maintains BEM’s FY18-19F earnings forecasts of ฿3.62bn (+15.8% YoY) and ฿4.30bn (+19.0% YoY). For now, the positive effect from lengthening the expressway contract would be seen from 2020. KGI believes there would be positive impact from potentially lower-than-expected depreciation and amortization considering the longer length of the concession contract.
In the future, there will be two highlight projects for BEM: i) bidding on the Orange Line and ii) bidding on the Southern Purple Line. Preliminarily, KGI expects the Orange Line (management phase only) to add around ฿0.9/share to BEM’s valuation. However, a slower-than-expected economic recovery and political uncertainty must be closely observed as it could have had huge effects on BEM.
