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Sino-Thai Engineering
KGI Securities (Thailand) has maintained its "outperform" rating on Sino-Thai Engineering and Construction (Stecon) shares, with a target price of Bt7 apiece.
Apart from the strong potential of signing a petrochemical construction contract in Singapore, Stecon also expects to get more petrochemical projects from other foreign markets.The company will concentrate on the Middle East and the Asia-Pacific. This should help its gross margins recover significantly in the next few years, as gross margins on petrochemical projects are expected to be in the high double digits. Stecon is now waiting for bidding results for housing work worth Bt1 billion to Bt2 billion in the Maldives and highway and mechanical work worth Bt7 billion to Bt8 billion in Qatar. With domestic public works drying up, Stecon is confident its expansion strategy into foreign markets will be positive over the long run. Stecon's gross margins are set to increase in the second half and next year, as it will realise material revenues from power-plant projects. The company has a Bt23.5-billion backlog.
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