Aims to win 25% of government contracts
A new company formed from the merger of two subsidiaries of Ch. Karnchang Plc (CK), Thailand second-largest construction firm, has the potential to win several government infrastructure contracts in coming years.
Employees of BECL, a subsidiary of Ch. Karnchang, work with rebar at the Si Rat-Outer Ring Road Expressway project, an elevated sixlane road spanning 16.7 kilometres. PATTARACHAI PRECHAPANICH
The merger of BMCL, operator of the Blue Line subway train, and BECL, the operator of the western expressway in Bangkok, is likely to give the new company better liquidity to bid for more projects, analysts said.
CK said it expected the unnamed new firm would help wipe out BMCL’s accumulated losses of around 13 billion baht, incurred since 2005, by the end of this year. It hopes the company’s earnings outlook will turn positive.
Prior to the merger, CK owned 15.15% of BECL and 25.2% in BMCL. CK holds 30% of the new firm after the merger.
The merger process is expected to be finished by the end of July, with shares of the new company traded on the Stock Exchange of Thailand by the end of this year.
CK also holds a 30% share in CK Power Plc (CKP), its power business arm, and a 19% share in Thai Tap Water Plc.
Plew Trivisvavet, CK’s chief executive and president, said the new company was ready to bid on construction of government mass transit projects including expressways, motorways and electric train projects.
The government plans to accept bids for more than 12 electric train projects and five motorway and expressway projects worth over 600 billion baht this year and next. “We hope to win 25% of those projects,” said Mr Plew.
With newly registered capital at 15.3 billion baht and market capital worth 78 billion baht, the new company has ample funds to construct electric train projects.
The recent merger is part of CK’s restructuring after it sold its 30% share in Xayaburi Hydro Power in Laos to CKP.
CKP has several projects in hand worth over 3 billion baht to operate from 2015-19, including Xayaburi and Nam Bak Hydro Power in Laos.
Prasert Marittanaporn, senior executive vice-president of CK, said CK had a huge backlog of projects worth 100 billion baht that would generate certain revenues over the next four years, including extension of the Blue Line and construction of the Purple Line, an expressway west of Bangkok and a Xayaburi Hydro power plant.
The company expected the government’s massive infrastructure investments of 2.4 trillion baht over the next 10 years to generate revenue of more than 40 billion baht this year, an increase from 34 billion last year.
CK shares closed yesterday on the SET at 29.25 baht, unchanged, in trade worth 283 million baht.