The delay in Bt1.8 trillion worth of investment in mega-projects has forced a number of construction contractors and materials producers to revise their business plans and scramble for alternative projects to compensate for a possible shortfall in forecast earnings.

Some companies said they were now putting more focus on overseas markets.

Ch Karnchang Plc plans to bid for contracts to construct hydro dams in Laos, a source said.

"The delay in the mega-projects has reduced the number of projects on the market," the source said. Contractors who have yet to sign contracts for mega-projects will be hurt by the delay, he added.

A number of the government's mega-projects - particularly the Bt555-billion mass-transit expansion - are unlikely to start this year as a result of the House dissolution and the subsequent political fallout.

The Transport Ministry has said that the mass-transit development will be delayed by at least one month. Other projects are not expected to start in the third quarter this year as planned.

Woraphant Chontong, chief finance officer of Sino-Thai Engineering and Construction Plc, said the delay would hurt those contractors expecting to get transport contracts.

Sino-Thai has already signed Bt26 billion worth of contracts so it should not be severely affected, Woraphant said, adding that contracts worth a combined Bt9 billion had yet to be signed.

The signed contracts should generate income over the next two and a half years and by then more projects should be open for bidding, he said.

Sino-Thai will shift its focus government offices, roads and power plants, rather than wait for transit projects, he added.

Thitikorn Supboonrod, general manager for operations of LPN Plate Mill Plc, said hot-rolled steel producers would not see much impact from the delayed investment because steel is only a minor component in the mega-projects.

The company is planning to increase exports.

"Despite the political tension, in January to February the company's orders did not slow down because most of our clients had already signed contracts. In the next phase, however, the company has to find new markets overseas to offset the expected lost income from the slowdown of mega-projects," Thitikorn said.

Uncertainty will affect business decisions more than the delay in the mega-projects, he said.

"The government should make a clear time line so that business operators can draft their business plans. They are not afraid of the delay, but they want to know exactly when [the projects will be launched]."

PreBuilt Plc CEO Chaiyarat Thampeera said the delay would prevent a labour shortage.

"Last year, we were quite concerned that the government's mega-projects would draw labour from the private market. The delay will help solve the labour shortage," he said.

DBS Vickers Ballas Securities said in a report that political tension would have a short-term impact on construction companies.

However, the impact will be huge on investors who have bet on short-term gains on companies expected to reap windfalls from the mega-projects, the report said.

Political tension could cloud the mega-projects, but the brokerage said it still believed the government would push forward with the infrastructure investment because it is central to economic growth over the next four to five years.

It suggested that investors buy shares in construction companies that will see revenues from the current backlog over the next two years, even in the absence of mega-project investment. It recommended buying Sino-Thai, Ch Karnchang and Power Line Engineering as long as their share prices are under Bt14.82, Bt15 and Bt14.55, respectively.

Far-East Securities Co Ltd, however, does not recommend buying shares in construction companies, citing a report that mass-transit development is likely to be delayed from the middle of the year.

It said the government had to put its focus on political uncertainty and that the appointment of a new transport minister could lead to more time spent studying the projects. As a result, construction companies hoping for an income boost from transit projects may have to wait, it said.

SCB Securities also underweighted the construction sector, saying political jitters could persuade potential home-buyers to delay their decisions - as well as leading to a further postponement of the mega-projects.

However, it exempted three firms from its gloomy forecast - Italian-Thai Development Plc, Land & Houses Plc and Quality Houses Plc. 

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The Nation