Constructors unfazed by cut in train routes
Construction firms say they will not be critically affected by newly appointed Finance Minister Chalongphob Sussangkarn's announcement that the government will initiate only one or two electric-train routes.
Five routes were originally planned. Capital Nomura Securities said the announcement would only have a psychological effect on investors. One broker said, "If bidding for one or two electric-train routes takes place this year, it will still represent significant progress and not hurt any construction firms unless the bidding is postponed by procedures. It is unclear which companies will win the bidding, given the strong competition." Former finance minister MR Pridiyathorn Devakula set a bidding time frame for all five electric-train routes. The five routes included the Rangsit-Bang Sue-Taling Chan Red Line, the Bang Sue-Bangkok Yai Purple Line, the Bang Sue-Tha Phra-Bang Khae Blue Line, the Samrong-Samut Prakan Light-Green Line and the Mo Chit-Saphan Mai Dark-Green Line. Asia Plus Securities said the decline in construction stocks seen after the new finance minister's announcement would be short-lived. A company broker said, "There is still a policy of building electric trains, but Chalongphob doesn't want to create excessive debts for the next government. "This is in line with our estimates. We predict the Red Line will begin first, because it does not need a loan from the JBIC [Japan Bank for International Cooperation], it is not under the Joint Venture Act, and its design is ready for bidding next month." Finansa Securities remained bullish over the health of the construction sector, because the value to the industry of the two routes totals Bt40 billion out of the five routes' overall budget of Bt165 billion. The broker said the bidding would benefit the sector, because it was yet to be included in the industry's earnings forecast. Even without the electric-train-route contracts, construction firms' backlogs would create income streams for the next few years, he said. Seamico Securities echoed Asia Plus Securities' projection that Red Line would be the first route up for bidding. The firm maintained its interest in large construction companies, because their backlogs were sufficient to generate income for several years.
Siriporn Chanjindamanee The Nation
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