Kiatnakin Phatra Securities (KKPS) has initiated coverage of Bangkok Expressway and Metro PCL (SET: BEM) with a ‘Buy’ rating and a price objective of THB 8.55, valuing the shares with a discounted cash flow (DCF) model using a WACC of 6.05%.
The securities company noted that the current valuation appears compelling, with BEM’s 2026 estimated price/earnings-to-growth (PEG) ratio below global infrastructure peers and its price-to-book multiple at the lowest level since its 2016 listing on the SET. This is despite BEM posting return on equity (ROE) figures that surpass both its historic average and those of its regional counterparts.
While BEM is facing cyclical challenges in 2025—owed to unique factors such as work-from-home patterns following an earthquake, sluggish domestic consumption, and interruptions from construction activities—KKPS projects a return to growth in 2026-2027, supported by recovering traffic and rail ridership. More broadly, the firm believes the market underestimates BEM’s longer-term expansion opportunities.
Projects including additional Blue Line trains, the Orange Line East scheduled for operation in 2028, the South Purple Line set for 2029, and the Double-Deck Expressway all contribute to robust earnings visibility extending beyond 2030. This positions BEM to transition from a primarily defensive play to one offering both value and structural growth over the long term, according to KKPS analysis.
On concerns over high debt and leverage, sentiment was further weighed by a TRIS Rating downgrade. KKPS argues these concerns are more perception than substance, as much of BEM’s reported liabilities stem from advance payments to the MRTA for work on the Orange Line—which will be reimbursed—and from Blue Line remuneration obligations that begin to amortize after 2029. When adjusted for these items, the company’s leverage is broadly in line with peers, with capital expenditures expected to peak in 2025. Accordingly, KKPS views balance sheet risks as largely optical rather than structural.
Potential catalysts for BEM include approvals for the Double-Deck Expressway, rollout of additional Blue Line trains, commencement of operations on the Orange Line, ongoing progress with the South Purple Line, and sustained traffic recovery on its expressways. Main risks cited by KKPS involve delays to the Orange Line’s start of operations, postponed adjustments to MRT fares or work-related reimbursements, late delivery of Blue Line trains, or unexpected disruptions to expressway services.
