Stocks of construction firms surged across the board on reports that Deputy Prime Minister MR Pridiyathorn Devakul will seek approval from the Cabinet today for five electric-train routes.

The euphoria could also be attributed to a slew of listed construction firms signing many deals.

Ch Karnchang was the big gainer among its industry peers with a 7.84-per cent rise at Bt11, Italian-Thai Development Plc chalked up gains of 5.30 per cent at Bt6.95, and Sino-Thai Engineering and Construction was up 4.10 per cent at Bt6.35.

Power Line Engineering Plc bucked the trend on selling pressure after it announced a recapitalisation plan.

KGI Securities (Thailand) vice president for strategic research Adisak Kammool recommended that investors avoid scooping up construction stocks as their prices have risen significantly.

"The sharp increase in building firm stocks comes as investors bet on their future projects, but investment at the moment carries risk because of the possibility of profit-taking," he explained. "It is hard for the government to push the five projects and construction stocks would drop dramatically if the Cabinet does not approve all of them. The higher the increase in share prices, the greater the risk from correction," he said.

Adisak said that his house still maintains its existing research on building company stocks because of uncertainty about the availability of construction projects.

MR Pridiyathorn surprised the market by announcing that five electric-train routes would seek Cabinet approval, up from three routes in a recent plan.

Four construction companies yesterday announced a series of contract signings.

Italian-Thai Development reported in a filing with the Stock Exchange of Thailand that it has signed contracts to construct five projects worth a total of Bt556.43 million.

The projects are the foundation and substation construction project of Thainox Stainless Plc in Rayong province worth Bt96.20 million; a road tunnel under railway track construction project of Property Perfect Plc worth Bt37 million; Bangkadee Industrial Park natural gas pipeline of PTT worth Bt90.95 million; Chitralada School (Polytechnic) in Dusit district worth Bt199 million, and the Southern Outer Bangkok Ring Road Inter City Motorway project of China Harbour Engineering Co Ltd worth Bt133.28 million.

Syntech Construction Plc reported that it has inked deals to build four projects: Supalai Casa Riva's building B-F valued at Bt574.77 million; City Home Rachadapisek worth Bt345.79 million; a Capsugel pharmaceutical factory including waste plant and road works worth Bt57.8 million, and the Sail Pattaya project worth Bt579.5 million.

Seafco said it has been awarded the underground basement works of the Bt294-million Millennium Towers project from MR Sukhumvit Ltd.

Pylon said it has been granted three projects: the Bt67.41-million Amata Condominium-Rama IV from Nayara Estate, the Bt9.88-million Research and Development Centre of Srinakarinviroj University from Kumjornkit Construction, and the Bt10.20-million Ramatibordee Hospital from Kumjornkit Construction.

Kim Eng Securities (Thailand) has maintained an "accumulate" recommendation on Ch Karnchang Plc.  After signing a contract for the construction of the Nam Ngum 2 project, worth Bt20.4 billion, the constructor's backlog has risen to Bt29.78 billion.

The company is waiting to sign contracts for a toll collection and traffic control system project, worth Bt2.43 billion, with a high potential to secure several other projects worth another Bt4 billion to Bt5 billion in the fourth quarter this year.

The brokerage expects to see a strong growth of Ch Karnchang's normalised profit in 2007 to 60 per cent year-on-year, or Bt473 million, to be driven by revenue growth with improved margins and higher contributions from affiliates. It has set fair value for Ch Karnchang at Bt11.2 per share, Italian-Thai at Bt7.65 and Sino-Thai Engineering at Bt5.85.