CH Karnchang bets on infrastructure

Construction News Laos Myanmar

CH Karnchang bets on infrastructure

28 April 2018

CONSTRUCTION firm CH Karnchang Plc aims to secure at least a quarter of the contracts expected to be put to bids this year under the government’s plans for infrastructure projects, chief executive officer Supamas Trivisvavet said yesterday.

“With the total value of the projects at Bt2.39 trillion, we believe that at least Bt400 billion worth of contracts will be put to open bids during the rest of this year,” said Supamas, referring to the government’s ambitious programme for infrastructure development, with many of the projects focused on the Eastern Economic Corridor. “We hope to win the bids on at least 25 per cent of the new contracts to go out under open bidding this year.”

The company’s investment budget will come from its initial cashflow and borrowings from commercial banks, as well as through a planned Bt2 billion debenture issue, she said.

“We have room to borrow loans from the banks and issue the debenture as we have a debt to equity ratio of 1.27:1. The banks’ conditions stipulate a debt to equity ratio of no more than 3:1. Our financial cost now averages 3.2 per cent. This is a challenge for our investment,” Supamas said.

The company’s plans for business expansion would see total revenue from the construction and construction materials businesses reach Bt37 billion by the end of this year. This estimate places the result as similar to last year’s.

“The net profit margin will increase from an average 7.89 per cent to 8 per cent this year. Up to 95 per cent will come from the construction business, with the rest from the operations in infrastructure, energy, and other lines,” Supamas said.

For 2017, the company reported total revenue of Bt37.73 billion, a drop of 19.75 per cent from 2016, with the construction and construction material businesses contributing Bt35.92 billion and other businesses Bt1.8 billion. Net profit of Bt1.81 billion marked a fall of 9.54 per cent from 2016.

The company has a total backlog of construction contract projects worth Bt72 billion, with 63 per cent from mass transit projects. The energy business accounts for 20 per cent and double-track rail systems 11 per cent. Motorways and other roads make up 4 per cent and the remaining 2 per cent comes from building construction.

In 2018, the government is expected to expedite several infrastructure projects worth a total of Bt2.39 trillion. These include: the MRT Purple Line – South (Tao Poon–Rat Burana) at Bt130billion; the Rama III-Dao Khanong-Western Bangkok Outer Ring expressway at Bt310 billion; the SRT Double Track Phase 2 in nine routes at more than Bt400 billion, the Bang Pa-In-Nakhon Ratchasima motorway with compensation of Bt33 billion; the Bang Yai – Kanchanaburi motorway with compensation of Bt27 billion; and the 220-kilometre high-speed train service linking Suvarnabhumi, Don Mueang and U-Tapao airports worth Bt200 billion. The latter will be procured as a public-private partnership (PPP), and CK and BEM are well prepared to join the bidding for this project, Supamas said.

Meanwhile, the company has continued to expand its investments overseas, especially in Laos and Myanmar on infrastructure and energy projects.

“We have invested in hydropower electricity in Laos and our subsidiary TTW Plc is negotiating to invest in Myanmar at up to US$12 million,” Supamas said. “We expect to conclude the deal this year.”

Supamas said that the company has continued to increase its investment in the construction and infrastructure businesses in both the domestic and overseas markets in order to drive total revenue towards sustainable growth over the long term.

“We believe that construction industry will see continued growth this year thanks to the government investment to develop the country’s infrastructure projects,” she said.


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