4. BANGKOK METRO PUBLIC CO., LTD
BMCL - 1998,
M.R.T. Transportation
Blue Line
Concession
Agreement
Industry
from MRTA in
2000 based on 2004 began
BOT operation
(25 yrs till 2029) (19 trains, 18
stations, totaled
20 km) 2006 listed on
the Stock
Exchange of
Thailand
5.
6. MRT - OPERATION
M&E contract to
Lincas & Siemens
(turnkey approach)
BMCL:
BMCL:
design,
manufacture, Operation and
maintenance of
supply, install and MRT
test commission
MRT
7. PRE-IPO FINANCIAL STRUCTURE
DEC 2005
14,314 m (72.5%)
6 Major shareholders Debt
1. CH.Karnchang Plc ,Ltd. 40.26%
2. Bangkok Expressway 18.89%
3. Natural Park Plc ,Ltd. 18.75%
4. Krung Thai Bank 9.56% 19,731 m
5. TMB Bank 4.81% 5,417 m (27.5%)
6. Employees 3.88% Equity
7. Siam City Bank 2.30%
8. Tokyu Construction co, Ltd 1.31%
9. Others 0.25%
64 % 100 % 56 %
Metro Mall BMCL Network Triads Networks
Development Ltd. Co., Ltd.
Ltd.
1.Long Term Loans – tranche A 11,000(76.85%)
(For procurement of the M&E Equipment)
2. Long Term Loans – Tranche D 500 (3.49%)
(For payment of additional project costs)
3. Long Term Loans – Tranche D 650 (4.54%)
(For payment of additional expenses from
KTB,TMB,BAY and SCIB)
4. Other Liabilities 2,164(15.12%)
(Construction and other payable)
8. POST-IPO FINANCIAL STRUCTURE
SEPT 2006
Major shareholders 12,802 m (60.27%)
Debt
1. MRTA 25%
2. Public 23.07%
3. CH Karnchang Plc, Ltd 19.56%
4. Natural Park Plc, Ltd 12.00% 21,241m
5. BECL 9.99% 8,439 m
6. Krung Thai 3.94%
7. TMB Bank Pcl, Ltd 2.00%
(39.73%)
8. siam City Bank Pcl, Ltd 0.96% Equity
9. Tokyu Construction 0.84%
10. Others 0.16%
11. Directors, Exe & Staff 2.49% 64 % 70% 56 %
Metro Mall BMCL Network Triads Networks
Development Ltd. Co., Ltd.
Ltd.
1.Long Term Loans – tranche A 10,560 (82.5%) 2006, balance of
(For procurement of the M&E Equipment) Tranche D Facility &
2 . Long Term Loans – shareholder 1,065 (8.3%)
(CH.Karnchang Plc. ,Ltd)
Tranche E Facility
3. Other Liabilities 1,177 (9.2%) paid in full (1,114.4
(Construction and other payable) m ).
9. PUBLIC LISTING
• Investors become a part of
company also risk sharing
• Hence, repayment is not the
• Expensive cost of
capital
• Risk of high exposure
-
obligation and cheaper • High cost and time
debentures consuming
• Benefit from Share price • Decision making power
• Transfer of skill and
knowledge
+
10. BMCL AND IPO
Expansion of Capacity
5 trains
To compensate for crash accident
High cost, low revenue
Debt Service
Investment
Subsidiaries
Metro Mall Development Limited
BMCL Network Limited
Traids Networks company Limited
12. ASSUMPTIONS FOR VALUATION:
•The project is BOT, and concession period is 25 years begin from year 2004
•Fare rate is adjusted according to CPI -6% increase in very 2 year starting from
2010
•Passenger growth rate for existing line: 15% for year 2010-2013
•Passenger growth rate for expansion line: Data Source-BMCL
•Other Income is assumed to be 15% for this project which will compose from
advertising service, Telecommunication services & retail space leases
•Selling and Administration expenses is 15% for existing line and 5% for
expansion line with correspondent revenue
•The Maximum capacity is 1080000 Passenger per day
•The Interest rate for Tranche A loan is MLR +.25%, Tranche E loan and CH.K
Loan is MLR + 0.5% respectively
13. ASSUMPTIONS FOR VALUATION:
•Salary and Wage is 15% of revenue fare box revenue
•Repair and Maintenance cost will increased by 1% each year after 2009
•Utility and Insurance cost are fixed-Historical income statement
•Cost of Commercial Development is 65% of it's revenue for whole project life
•Project Cost Amortization is apportion according to number of passenger
•The company will pay the rest of its interest(which was capitalize) when it has
enough cash flow (repay in the year 2013 at once)
•Corporate Income tax-30%, Company has tax holiday for 8 years
•The company has 8 years tax holiday and loss carry forward to 5 Years,
according to tax law of Thailand
•Revenue is apportion to MRTA according to contract
14. INCOME SOURCE
Fare box revenue-87%
(The revenue come from the operation of train service in the form of Cash &
Prepaid Card)
Commercial development revenue-13%
(The revenue compose from advertising service, Telecommunication services &
retail space leases)
15. EXPENSES
Cost of fare box
Salary, Wage & other employees benefit
Repair and maintenance cost
Utilities cost
Insurance expenses
Selling and administration expenses
Cost of Commercial Development
16. VALUATION: FCFE
Free Cash Flow to Equity Amount in Bn Baht
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
(904.13) (630.15) (419.88) (20.20) (52.77) 4,160.41 (1,051.41) 1,130.01 2,085.70 2,434.64
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
1,755.83 1,835.16 896.00 (104.53) 1,471.54 2,654.90 2,415.16 2,657.35 2,535.16 3,038.63 2,908.98
FCFE
5,000.00
4,000.00
3,000.00
Billion Bt
2,000.00
1,000.00 FCFE
-
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
-1,000.00
-2,000.00
Year
BMCL will have positive FCFE only after year 2013
BMCL has to share revenue with MRTA from the year 2015, so that FCFE is negative
17. DSCR TO LENDERS
DSCR
36.00
34.00
32.00
30.00
28.00
26.00
24.00
22.00
20.00
18.00
DSCR
16.00
14.00
12.00 DSCR to Commercial Lender
10.00
8.00 DSCR to Share Holder
6.00 Minimum Requirement
4.00
2.00
-
-2.00
-4.00
-6.00
-8.00
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Year
Minimum required DSCR is (according to Concession) 1.2, which is not satisfied
18. STOCK VALUATION-EXISTING CAPACITY
NPV $8,028,138.66
Outstanding Share 11,950,000.00
Share Value 0.67
Current Market Price 0.73
(As on 28/11/2009)
In the current situation, we can’t recommend investors to
buy the stock since it is over valued
19. STOCK VALUATION-
IF BMCL INCREASE IT’S CAPACITY
Year No of Value of Market Price Recommendation
Train Stock
2018 1 0.86 0.73
2018 2 1.02 0.73
2018 3 1.17 0.73
2019 4 1.32 0.73
2019 5 1.48 0.73
If BMCL announce future plan to buy more Trains, we
recommend investors to buy the stock
20. STOCK VALUATION:
-IF THE CONSTRUCTION IS EXPANDED
line delayed
Share Value
0.60
0.50
0.40
Baht
0.30
0.20 Price of Stock
0.10
-
1 2 3
Delayed Year
The value of stock is very sensitive to the expansion plan, if it delayed the
valuation will significantly change
21. SCENARIO ANALYSIS
If fare changes
Value of Share
1.40
1.20
1.00
0.80
Baht
0.60 Share Price
0.40 Market Price
0.20
-
-5% 0% 5% 10% 15%
% Change in Fare
The share price of BMCL is highly sensitive to fare rate. If the fare increases the
investment in BMCL will be attractive
22. SCENARIO ANALYSIS
If BMCL do not share revenue with MRTA
Value of Share
3
2.5
2
Baht
1.5
1
0.5
0
Revenue Share with MRTA Revenue do not Share with MRTA
BMCL stock price is attractive if it has not to share revenue to MRTA
25. REFINANCING OPTIONS
(DSCR SENSITIVE)
Availability Cost Covenants
Debentures
Weight Symbol
Debt
Restructuring Not Imp.
Little Imp.
Debt
Refinancing Imp.
(New Banks)
Very Imp.
Debt Most Imp.
Refinancing
(Old Banks)
Subordinate
Debt
Bankruptcy
26. REFINANCING OPTIONS
(REPUTATION SENSITIVE)
Availability Cost Covenants
Equity Dilution
New Sponsor
Govt. Aid
-MRT payment
-Guarantee
-Increase Price Weight Symbol
-Arrange Loan Not Imp.
Little Imp.
Imp.
Very Imp.
Most Imp.
28. PROJECT RISK DISCUSSION
• All the Projects are risky
• In beginning we decide to accept /reject Project on the basis of Risk
Assessment
• During the Operation phase many of the Risks are realized. At this stage
the Role of risk Mitigation strategies become obvious.
• In one way it can be said that If the Risk Mitigation strategies are well
perceived & executed, can make the project less risky at the later stages
especially after the Heavy Investments are made & Operations started.
• Thus the failure/success of a project can be attributed to the extent to
which the appropriate Risk Mitigation strategies are identified & applied
when such are needed timely.
• In this context we tried to develop Risk Mitigation Matrix, as follows:
1- Identification & Rating of Project Risks
2- Identification of appropriate Risk Mitigation strategies (RMS)
3- After careful observations/readings assign the ratings to RMS
according to predetermined scale & multiply it with Respective Project
Risks.
4- To get an idea how each risk Mitigation strategy is successful in coping
the relative Risks
29. PROJECT RISK
Risk Factors Risk Mitigation
1. Economic risk 1. Risks relating to fare revenue
2. Risks relating to fluctuation of 1. Revenue sharing should be
cost of fare reviewed
3. Risks relating to revenue from 2. Relaxation in fare price terms
commercial development of concession agreement
4. Inflation
2. Financial risk 1. Unavailability of funds 1. Government can help in
2. Company reliance on the renegotiation in restructuring
financial support from its major 2. Government guarantee
shareholders
3. Contractual and legal 1. Delay in solving contractual 1. Involvement of Higher
risk issues Government
2. Delay in solving disputes
3. Change order negotiation
30. PROJECT RISK
Risk Factors Risk Mitigation
4. Operational & 1. Company reliance on 1. Qualified staff
Technical Risk Siemens and Lincas for 2. Fix as many operating risks as
manufacture and possible to provide
maintenance of its M&E 3. Ensure strong penalty clauses
Equipment or cost sharing arrangements
2. High maintenance cost are included within contracts
3. Subcontractors-related risks for technical services & time
4. Equipment productivity delays
5. Labor productivity
5. Design & Physical 1. Inadequate specification 1. Fully investigate the
risk 2. Conflict of documents opportunities for staging the
3. Difference in execution development to meet demand.
4. Design change
5. Geological risk
6. Construction material risk
6. Foreign Exchange Risks from the interest rate and 1. Applying appropriate Hedging
Risk foreign exchange rate strategy
fluctuations
31. PROJECT RISK
Risk Factors Risk Mitigation
7. Construction risk 1. Delay Risk 1. Research the strength of the
2. Lack of coordination risk construction co. manage a contract
of this capacity and absorb cost
overruns.
2. Subcontracts
8. Political Risk 1. Risks relating to the 1. Contractual arrangements
Concession Agreement and
the govt supervision
2. Risks relating to the govt
policy in the construction and
operation of the mass transit
railway system
9. Safety and social 1. Accidents 1- Obtain insurance where possible to
risk 2. Ecological constraints protect against large-scale
3. Damage to persons or property environmental damage
4. Pollution and safety rules
5. Public consultancy
10. Force majeure War , Act of God, 1 - Obtain insurance where possible to
risk Fire and Theft protect against large-scale
environmental damage
32. OVERALL ANALYSIS
The decision to go for IPO before debt restructuring
seems to be rational since BMCL can raise money after
IPO and because good reputation amongst investors
BMCL’s revenue is very sensitive to both fare and
expansion line.
BMCL cannot serve the debt if there is no expansion.
The expansion part that will have significant effect on
the existing line is Blue Line, Green Line and Red Line.
33. CONCLUSION
In light of several possibilities, if BMCL want to service
the debt they have to go for equity dilution, by issuing
new stock, however according to the current situation, it
is unlikely that it will get positive response from the
investors.
The investors should invest in the company if the
plans of future expansions are certain and the company
commit to buy additional trains in future.
This company will need Government Aid in order to
enhance the operations feasibility in future.
34. SOURCES
Primary Source:
Interview with MRTA, BMCL officers and Kim Eng Analysts.
Secondary Source:
http://www.bangkokmetro.co.th
http://www.mrta.co.th
http://www.bangkoktransport.net
http://marketdata.set.or.th
http://www.2bangkok.com/2bangkok/Subway/newsold.shtml
www.kimeng.co.th
www.bangkokpost.com
www.ryt9.com
35.
36. SCENARIO ANALYSIS
If the Train Crash in the Year 2018
If Train Crash in Year 2018
Share Price
0.8
0.7
0.6
0.5
Baht
0.4
0.3 Valuation
0.2 Market Price
0.1
0
0% 50% 70% 80%
Revenue Decreased
