We expect BEM to report another quarterly high in 3Q24F at Bt1.1bn, up 4.6% QoQ and 8.1% YoY. Based on 9M24 traffic, we see downside to our MRT ridership forecast as we assumed 15% growth vs 10.3% in 9M24. Based on our sensitivity analysis, each 5 ppt drop in ridership growth would slice 3.6% off our 2024F and Bt0.1/sh off TP. We will revisit our numbers after release of 3Q24 results (Nov 13). There is no further news on the concession buyback, which means it is not happening soon. If it does take place, we feel this will be good for BEM. We maintain OUTPERFORM with SOTP-based TP of Bt10.5/sh (Bt8.2/sh for core business, Bt1.5/sh for the Orange Line and Bt0.8/sh for investment in TTW and CKP). BEM is our top pick in the sector.
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BEM – Preview 3Q24F: To be another good quarter
Expect 3Q24F to grow QoQ and YoY. We estimate 3Q24F net profit at Bt1.1bn, up 4.6% QoQ and 8.1% YoY, with growth both QoQ and YoY driven by higher expressway traffic and MRT ridership. Revenue from the expressway (57% of total revenue) is estimated at Bt2.3bn, up 7.6% QoQ and 1% YoY, with the low YoY growth due to partial closure of its expressway. MRT revenue (45% of total revenue) is estimated at Bt1.8bn, growing 11.9% QoQ and 8.7% YoY, underwritten by growing ridership. Revenue from the commercial development business (8% of total revenue) is at Bt315mn, up 2.9% QoQ and 12.9% YoY, aligning with growing ridership. In the quarter, BEM will book dividend income from TTW of Bt221mn. Based on 3Q24F numbers, 9M24 net profit will account for 72% of our full-year forecast. Results will be released on Nov 13.
Traffic updates. Expressway traffic fell 1.6% MoM, but was flat YoY at 1.1mn trips/day in September. The MoM drop was because schools were closed for the mid-year term break while YoY was impacted by partial closure of the expressway network. Overall, 9M24 average traffic was 1.1mn trips/day, flat YoY, lining up with our full-year 2024F forecast of no growth. Average ridership on the MRT (Blue Line) was 437.8k trips/day, down 2.8% MoM, but up 4% YoY, bringing 9M24 average ridership to 420.6k trips/day, up 10.3% YoY vs. our 15% growth in 2024F.
Keep 2024F forecast, but see some small downside. We keep our 2024F at Bt4bn, up 15.6% YoY. Although we do see a small downside to our full-year MRT ridership forecast based on 9M24 numbers, we will revisit our numbers after it posts 3Q24 results. Our sensitivity analysis suggests that each 5ppt drop in ridership growth slices 3.6% off our 2024F earnings and Bt0.1/sh off our TP. In 4Q24F, we expect earnings to drop QoQ due to lack of dividend income, with growth YoY, backed by higher MRT ridership.
No more news on concession buyback. Discussions with BTS and BEM indicate that the concession buyback is unlikely to take place soon, as there are no official talks yet. However, the local press says the budget will be ~Bt200bn, which seems reasonable based on our estimates.
Risks and concerns. The weaker-than-expected MRT ridership growth in 9M24 could pose downside risk to our forecast. Key ESG risk for BEM is travel safety. A perception of lack of safety would reduce the number of people using expressways and MRT. This would lead to downside to our earnings forecast.