Ch Karnchang looks to bag 25% of infrastructure projects

21.12.17

Listed construction firm Ch Karnchang Plc expects to win |bids for at least 25 per cent of the country’s infrastructure projects worth more than Bt500 billion in 2018, the company’s chief executive officer Supamas Trivisvavet said.

The company is targeting total revenue of Bt35 billion next year from its total backlog of Bt78.59 billion, which are projects on hand and expected to be completed in 2018-19. Up to 25 per cent of total revenue will come from its overseas business, mainly Laos and Myanmar, she said. Meanwhile, the company believes it will achieve its total revenue target of Bt35 billion this year after reporting Bt30.89 billion revenue and Bt1.59 billion net profit in the first nine months, Supamas added. She said the Thai government would open bids for more infrastructure projects in 2018 such as rail system, roads and motorways worth more than Bt500 billion.

The group will bid for the Bt200-billion Purple Line route extension, the Bt20-billion Blue Line extension and the Bt100-billion double rail system. “We have a lot of experience in building rail systems and we expect to win bids for not less than 25 per cent of the total infrastructure projects in 2018,” she said. She added that with Bt8 billion cash in hand, the company has enough cash to invest in the country’s infrastructure development projects. The company has a debt-to-equity ratio of 1.3:1. This gives us enough room to make bids, she said.

The company expects its gross profit margin to increase from an average of 7 per cent this year to up to 10 per cent in 2018 following restructuring of the group’s businesses this year to reduce management and financial costs, she said.
Currently, the company has interest rate cost of 3.32 per cent, which is lower than the average 3.65 per cent early this year after the company raised Bt3 billion through issue of debentures at an interest of 3.11 per cent, the company’s CEO said. “Our business strategy is to be the leading group for construction infrastructure projects in Asean by 2022 by developing human resources who have the ability to build infrastructure projects in the region.

At the moment, we have human resources enough to expand our business in Asean by focusing on two neighbouring countries – Laos and Myanmar,” she said. Currently, the company has invested in a hydropower electricity project, Xayaburi Hydro Power, in Laos. The company also is negotiating with the Lao government to invest in a new hydropower project and expects the deal to be finalised in 2018.
In Myanmar, the company’s subsidiary, Thai Tap Water Supply Plc, has signed a contract to invest Bt400 million for providing tap water in Myanmar. “Tap water in Myanmar is our pilot project to expand our investment in this country. We also are interested to expand our investment in infrastructure projects in Myanmar when the Myanmar government opens up for private sector investment in the future. We see business opportunities in Myanmar for the long term,” she said.
However, the domestic market will remain the company’s main business as the Thai government plans to invest more than Bt1.7 trillion between 2018-22 to develop the country’s infrastructure. “The domestic market will still be our main business, as risk is lower here compared with expanding investments overseas,” she said.