Ch. Karnchang Plc (CK), Thailand's second-largest contractor by market value, expects almost 39% revenue growth this year on the back of anticipated construction projects both at home and in neighbouring countries.
Plew: Foreign roads and airports in plan
Plew Trivisvavet, the chief executive and chairman, said Ch. Karnchang targets revenue of 25 billion baht this year, up by 7 billion from an estimated 18 billion last year.
That would still come in slightly below the nearly 27 billion baht posted more than a decade ago before the recent financial crisis.
Results for last year's fourth quarter have not yet been released.
The first nine months saw revenue of 15 billion baht, up from almost 11 billion in the same period in 2011.
However, net profit for the period was only 316 million baht, a significant drop from 1.21 billion.
"This year, we anticipate the Thai economy remaining strong, with several infrastructure projects set to be launched by the government including for water management, and we intend to bid for many of these," said Mr Plew.
"Infrastructure work in neighbouring countries such as for roads and airports will be launched to serve regional integration under the coming Asean Economic Community."
International projects contributed roughly 20% of Ch. Karnchang's revenue last year, with the proportion expected to rise to 40% this year, mainly from the Xayaburi dam in Laos.
Of this year's projected revenue, 10 billion baht will come from the Xayaburi project and the rest mainly from mass transit rail lines in and around Bangkok.
"About 15% of Xayaburi's construction, begun in 2012, will be completed this year. We're speeding up work on the project to be sure it's finished on schedule in 2019," said Mr Plew.
The contractor last year posted a record backlog of 120 billion baht.
Projects worth a combined 30 billion baht are waiting to be signed this year, bringing the backlog to 150 billion.
Including water management projects, Ch. Karnchang expects to clinch contracts worth 34 billion baht this year.
The nationwide hike in the daily minimum wage to 300 baht has affected Ch. Karnchang only marginally, as the company is using more machinery in place of workers at construction sites.
Meanwhile, an extraordinary general shareholders' meeting yesterday approved Ch. Karnchang's plan to sell an 11% stake out of its existing 30% share in Thai Tap Water Plc to Bangkok Expressway Plc (BECL), of which Ch. Karnchang owns 15.15%.
The transaction, which is set to be endorsed by BECL shareholders at a meeting today, will generate an extra 3.3 billion baht in revenue for Ch. Karnchang.
Mr Plew said the proceeds will be used mainly to repay debts now totalling 20.8 billion baht. After the sale, the company's debt-to-equity ratio will be reduced to 1.3 from 2.64.
Shares of CK closed yesterday on the SET at 22.30 baht, up one satang, in heavy trade worth 2.27 billion baht.
About the author
- Writer: Nareerat Wiriyapong
Position: Business Reporter