BTS Group Holdings: Transport & logistics

The Company 

BTS Group Holdings (BTS) has four separate business units that contributed revenues of 25% (mass transit), 36% (media), 38% (property development) and 2% (services) in 9M FY2014 (ending in March). The company focuses on the mass transit business, which is operated by a 96%-owned subsidiary, Bangkok Mass Transit System (BTSC). BTSC is the exclusive concessionaire and operator of the BTS SkyTrain core network, as well as the operator of a number of extensions to the core network along with the Bus Rapid Transit (BRT) system.

CONCESSION AGREEMENT: BTSC has a concession agreement with the Bangkok Metropolitan Administration (BMA) on the core network until December 4, 2029. Under the concession, BTSC has the right to receive 100% of revenues it collects from farebox sales and commercial revenue (advertising and retail space management) without any revenue sharing with the BMA. In April 2013, BTSC sold its rights to the future farebox revenues under its concession agreement with the BTS Rail Mass Transit Growth Infrastructure Fund (BTSGIF), of which BTS retains a one-third stake. For the extensions of the core network, BTSC was granted a 30-year operating and maintenance (O&M) agreement by the BMA (via its wholly owned subsidiary Krungthep Thanakom) until May 2042. Moreover, after the end of the concession contract of the core network, BTS was also granted the O&M concession contract for the core network from December 2029 until May 2042. Currently, BTS’s core network covers 23.5 km (23 stations) located in the main business area in Bangkok, while the extensions cover 12.8 km (11 stations).

Since the start of operations in 1999 until FY2013, BTS’s ridership has increased by a 10.6% compound annual growth rate (CAGR). Ridership grew by a further 8.9% in 10M FY2014 owing to organic growth, the start of commercial operation of a 5.3-km extension in December 2013, and a 36% increase in capacity after BTS added five sets of rolling stock, which began fully operating in February 2014. Currently, BTS operates 52 sets of rolling stock with 208 train carriages to handle 580,133 trips per day.

Development Strategy

BTS aims to be an investor, operator, developer and concessionaire for the mass transit system, both domestically and overseas. Currently, the total existing mass transit system in Bangkok and vicinity covers only 84.8 km, and the government has a master plan to develop and extend the system to 508 km by 2029. BTS targets participating in future mass transit development in every role, focusing on four extension lines with a total length of 85.3 km. The key concern is that the ongoing political uncertainty in Thailand may result in the delay of the mass transit development plan. Hence, BTS is also seeking investment opportunities overseas. The firm just announced that it will jointly form a consortium with CITIC Construction to enter into the bidding for the concession to operate the Beijing Subway Line 16 franchise project for a 30-year operation period. The bidding result is likely to be finalised during the first half of 2014. BTS’s media business operates via a 62%- owned subsidiary, VGI Global Media (VGI), which is also listed on the SET. VGI manages media displays, both BTS-related (in trains and stations), and non-BTS-related, which include modern trade, office buildings and others. The prospects for BTS-related media look promising owing to an increase in ridership and train capacity, while the future for non-BTS related media also looks bright based on growing private consumption and modern trade expansion.

In FY2010-13, VGI’s revenue and net profit expanded by 37% CAGR and 109% CAGR, respectively.

Although VGI’s performance has been impacted by the ongoing protests in Bangkok, especially non-BTS-related media, revenue is expected to turn around sharply after the political crisis is resolved.

The company’s property portfolio comprises commercial and residential units, with a 1358-rai land bank and a total book value of BT11.3bn ($369.51m).