Workers are seen on a scaffolding at a building construction site in Yangon. SET-listed contractor Christiani & Nielsen (Thai) is expanding in neighbouring Myanmar with the opening of a new subsidiary this month. AFP
SET-listed contractor Christiani & Nielsen (Thai) Plc (CNT) will open a subsidiary called CN Myanmar Co in the neighbouring country this month.
Assistant managing director Surasak Osathanugraha said the new subsidiary would join local partners to take on some of the rapidly expanding number of construction jobs.
“We’ve been there since early this year. One of our customers in Thailand wanted to expand manufacturing and build a factory,” Mr Surasak said.
Company activities are now limited to project management and supervising difficult or risky tasks, generating tens of millions of baht in fee-based revenue.
CN Myanmar will have registered capital of US$50,000, the minimum required for a foreign firm in that country, before increasing amid the high number of construction jobs expected.
More concrete plans will be finalised next year, Mr Surasak said.
“The Thai economy was sluggish in the first half, which affected the construction business as well,” he said.
“We hope the new cabinet hurries up with the megaprojects, which would help to alleviate the high level of competition in construction.”
CNT is interested in each bidding of the government megaprojects, Mr Surasak said.
It will either join experienced partners to take main contracts or pursue subcontracted jobs.
“At least when the megaprojects are launched, the major contractors will jump for them, leaving private sector jobs to other construction firms such as us,” Mr Surasak said.
As of June 30, CNT had a backlog worth 6.33 billion baht, of which 3 billion baht will be realised in the second half.
The company posted a first-half net profit of 15 million baht, down by 80% year-on-year, on revenue of 3.61 billion, down by 24%. Net profit margin was only 0.4%, down from 1.6%.
“We bottomed out in the midyear,” Mr Surasak said.
“Our performance is expected to pick up in the second half, as our existing jobs are less risky than those we delivered last year.”
In 2014, CNT posted a net loss of 354 million baht despite achieving revenue of 9.41 billion, the highest in several years.
The main reason was a loss incurred from building a new factory for the Thailand Tobacco Monopoly.
That loss was due mainly to wages rising to 300 baht a day from 180 baht proposed in the bidding.
The company also received no compensation for the 2011 flood crisis, which saw the site inundated for four months.
CNT has been in Thailand for 85 years and taken part in more than 1,500 projects including the construction of Democracy Monument, Klong Toey port and the Rama VI Bridge.
In 1991, it became the first construction company to list on the SET but was hurt by the 1996 financial crisis and had to undergo restructuring.
CNT shares closed yesterday on the SET at 3.36 baht, down four satang, in light trade worth 568,000 baht.