SET-listed Ch. Karnchang Plc (CK), Thailand's second-largest construction firm, expects the merger of its two subsidiaries will help to boost its financial situation.
Passengers ride on the subway, one of Bangkok's more popular transport options, serving 300,000 passengers a day. Subway operator Bangkok Metro Plc yesterday announced it would merge with expressway operator Bangkok Expressway Plc. Both are subsidiaries of Ch. Karnchang Plc.
The move is aimed at capitalising on government rail-transport expansion in the near future.
Phongsarit Tantisuvanichkul, executive vice-president for business development, said the merger of Bangkok Expressway Plc (BECL) and Bangkok Metro Plc (BMCL), both SET-listed, was expected to be completed by the third quarter, making the new entity's market capitalisation 78 billion baht.
"This is part of CK's organisational restructuring. We expect the merger will strengthen our business in line with the growing economy in the wake of the Asean Economic Community," he said.
"It should also get us more jobs from Thailand's mass-transport infrastructure investment."
The company has earmarked 1 billion baht to buy stock from small shareholders in BECL and BMCL after the merger.
BECL managing director Payao Marittanaporn said the company expected substantial revenue growth afterwards.
The windfall will be used for the Si Racha Expressway extension now under construction.
BECL expects revenue growth of 6% in 2015 from last year's 8.5 billion thanks to busier traffic, with the number of expressway users increasing by 0.5% to 1.1 million cars a day.
"We want to diversify our business, as we see good opportunities to profit from the new government investments," Mr Payao said.
"It's mostly trains, as the government does not have many road projects."
CK expects consolidated revenue growth of 3.57% to 11.6 billion baht this year after the merger from 11.2 billion last year.
Subway operator BMCL achieved revenue of 2.7 billion baht last year.
It expects the merger will afford it greater financial capability to pursue more projects, leading to higher profits this year.
"Rail is the most suitable type of transport for busy cities, and the government plans to expand the rail transport system by more than 500 kilometres this year," BMCL managing director Sombat Kitjalaksana said.
"The merger will not affect existing concessions or projects."
CK shares closed yesterday on the SET at 28.50 baht, up 1.75 baht, in heavy trade worth 4.07 billion baht.
BECL closed at 42 baht, down 50 satang, in trade worth 800 million baht. BMCL closed at 2.06 baht, down 32 satang, in heavy trade worth 2.44 billion baht.