Investors should not rush to buy the stocks of Sino Thai Engineering and Construction (STEC), BTS Group Holdings (BTS) and Ratch Group (RATCH), although prices have dropped sharply since the Pink Line mass transit incident on Sunday, says Bualuang Securities (BLS).
Shares of STEC, BTS and RATCH fell on negative sentiment after several kilometres of an aluminium conductor rail on the Pink Line monorail fell onto a street in the early hours of Dec 24.
BLS does not recommend investing in these stocks now, instead waiting to see how management reacts to regain public confidence after announcing additional safety measures.
Northern Bangkok Monorail Co Ltd (NBM), a joint venture of BTS, STEC and RATCH, won a concession to operate the Pink Line, which is in a trial period, with commercial service scheduled to start on Jan 3 next year.
Authorities ordered a temporary suspension of the entire Pink Line from Dec 24, but it is expected that normal operations should resume during the week for 21 stations unaffected by the incident, with the remaining seven stations closed for repairs.
BLS expects the Transport Ministry to allow seven days for the contractor to make repairs.
If repairs are made in seven days, the monorail line would remain on track to meet the commercial start date next month.
"Investors should follow developments during the week as to whether the authorities expect to postpone commercial operations," said the brokerage.
STEC is responsible for the civil construction work on the railway, meaning the contractor could face a serious issue, noted BLS.
If the incident was caused by the electrical system, problems may shift to another contractor in charge of the system, said the brokerage.
BLS said some of the Pink Line monorail is partially covered by insurance claims for damages.
As a result, the financial cost of the incident might not be serious for the project's operator.
Shares of STEC closed at 8.45 baht by midday Monday, down 0.58%, while BTS dropped 0.65% to 7.15 baht, but RATCH gained 0.82% to 30.75 baht.