SET-listed Tipco Asphalt Plc (TASCO), the country's biggest asphalt producer, expects sales volume to grow by 26% this year, driven by domestic infrastructure projects.
A convoy of trucks loading asphalt from Tipco Asphalt crosses from Thailand into Myanmar, a major market for the Thai asphalt manufacturer. SUBIN KHUENKAEW
The Asean Economic Community integration will be an additional factor boosting demand, said a source who declined to be named.
Tasco forecasts domestic asphalt sales of 430,000 tonnes in 2015, up from an estimated 340,000 tonnes in 2014. State infrastructure projects could push demand for asphalt from 800,000 tonnes to 1 million tonnes in 2015.
"We expect the government to kick off projects to build roads and other infrastructure in the first quarter of 2015, and that will help domestic demand rise substantially as new orders come in," the source said, referring to purchases by subcontractors who win bids for government projects.
The Transport Ministry has set aside a certain amount for new roads and maintenance of existing ones, with 6.1 billion baht to be spent by the Highway Department and 1.5 billion baht by the Rural Roads Department.
The outlays are part of a long-term plan to spend 3 trillion baht on infrastructure over the next eight years, starting in 2015.
Neighbouring Asean countries also plan to build new roads and upgrade existing ones. As a result, Tasco will expand in Vietnam, Laos, Cambodia and Myanmar to take advantage of rising demand.
Tasco gets about 25% of its revenue from the domestic market and the rest from foreign sales. It has supplied asphalt for several local infrastructure projects, including the Suvarnabhumi airport runways and the Don Muang tollway.
"The company's core business is selling asphalt to the construction sector, especially for roads," the source said. "So we expect the continuing government plans for infrastructure development to push demand higher in the second quarter of 2015."
The company is due to report 2014 sales volume of 1.8 million tonnes and revenue of 46 billion baht, according to the source.
Asia Plus Securities economist Prakit Sirivattanaket said Tasco's 2015 revenue would probably rise, fuelled by government spending on construction projects.
"We expect Tasco to have a better performance this year and a higher profit due to falling oil prices," he said. A lower cost of making asphalt, a petrochemical byproduct, would give Tasco higher profit margin.
TASCO shares closed Friday on the SET at 73 baht, up 50 satang, in trade worth 24 million baht.