3QFY25: Maintenance cost hit YoY growth
BTSGIF reported 3QFY25 core profit of Bt1.2bn, flat YoY, but up 16.1% QoQ. This brings 9MFY25 core profit to Bt3.3bn (-6.4% YoY), accounting for 80% of our full-year forecast. In 4QFY25F, we expect core profit to fall QoQ and be flat YoY. We maintain our NEUTRAL rating with a new DDM-based TP of Bt3.2 from Bt3.9 (5.9% WACC and no terminal value) after we roll our TP to end-FY2026F. This has a negative impact on TP since we assume no terminal value and the concession contract will end in Dec 2029. Potential upside surprise would be if the government did a concession buyback to implement its Bt20/trip policy.
3QFY25 results on track. BTSGIF reported a 3QFY25 (Oct-Dec 2024) net profit of Bt492mn, surging 847.8% YoY and 81.4% QoQ. In the quarter, the fund booked Bt740mn unrealized losses on investment (non-cash). Stripping this out shows a core profit of Bt1.2bn, flat YoY due to higher maintenance cost, but growing 16.1% QoQ on higher ridership. 9MFY25 core profit was Bt3.3bn, falling 6.4%, accounting for 80% of our full-year forecast. The fund announced a capital reduction of Bt0.2/sh (6.7% yield) with XN on Feb 25.
Highlights:
1) Farebox revenue was Bt1.8bn, up 4.2% YoY and 1.5% QoQ. Growth both YoY and QoQ was underwritten by higher ridership.
2) Operating and maintenance costs came in at Bt536.6mn, rising 18.9% YoY, but dropping 20.8% QoQ. Behind the YoY growth was higher maintenance expenses for rolling stock refurbishment and for civil work and property insurance premiums paid in the quarter.
3) Ridership and average fare updates. In 3QFY25, ridership was 53mn trips, increasing 6.2% YoY and 1% QoQ. Average fare was Bt33.4/trip, decreasing by 1.9% YoY, but increasing by 0.5% QoQ. The YoY drop was from monthly package promotions. During 9MFY25, ridership grew 6.2% YoY.
4QFY25F (Jan–Mar 2025) earnings outlook. We expect BTSGIF to report flat core profit growth YoY and a drop QoQ. Behind the flat earnings YoY will be higher maintenance cost, and this will also pressure QoQ. Additionally, its 4QFY25F has fewer operating days at 90 vs 92 days in 3QFY25.
Keep FY2025F assumptions. We keep our FY2025F core profit at Bt4bn, down 12.8% YoY. Although we expect ridership to grow 6.5% to 249mn trips and average fare to rise 5% to Bt33.5/trip, the 48% YoY growth in opex, largely from maintenance cost, will drag on YoY core profit.
Risks and concerns. The uncertainty over the long-term revenue visibility of the fund is unclear as the current contract ends in Dec 2029. Key ESG risk for the fund is service reliability.
