KGI Securities has raised its rating and target price for Bangkok Expressway and Metro Public Company Limited (SET: BEM) due to an expansion of its Blue Line network and pricing increase for its tollway.
In the research, KGI notes that the short-term outlook may be unexciting for BEM as the house anticipates limited growth in both traffic volume and pricing across its road and rail businesses. However, the firm remains optimistic on its long-term prospects, supported by capacity expansion of the Blue Line to accommodate future mass transit connections from suburban areas to the inner city, as well as potential expressway toll price adjustments under concession agreements.
KGI also sees CH.Karnchang Public Company Limited (SET: CK) and BEM as key beneficiaries of the public investment upcycle, with opportunities to secure upcoming PPP projects worth Bt400bn.
Additionally, KGI upgrades its rating on BEM to Outperform, from Neutral and also raises its SOTP-based target price to Bt7.15 from Bt6.00 (WACC 5.5%, terminal growth 0%), comprised of Bt5.15 for the core business (revised up from Bt4.00), Bt0.65 for investments in TTW and CKP, and Bt1.35 for the Orange Line.
