Building project value 'to sink'

Real Estate April 30, 2014 00:00

By Somluck Srimalee
The Nation

Ch Karnchang warns of upto 70% plunge this year

The value of new construction projects in Thailand could fall by up to 70 per cent this year, from an annual average of Bt600 billion to just Bt200 billion, Ch Karnchang said yesterday.
This is because delayed project spending by the government is also causing the private sector to defer new investment, as the country’s political turmoil shows no sign of ending.
“We cannot estimate when the country’s political conflict will end, but we now believe that new construction projects from both the private and government sectors will be delayed, leading to the country’s contractor business dropping by up to 70 per cent [this year] from the normal average of Bt600 billion,” Plew Trivisvavet, CEO of Ch Karnchang – a major listed contracting company – said after a shareholders’ meeting yesterday.
This also will impact on the demand for labour, which will fall in line with the decline in the construction market, he said.
While contractors should not suffer the same problem as last year, when there was a severe labour shortage in the industry, this is cold comfort to many workers who will find there are fewer labouring jobs as the number of projects drops off sharply, he added. 
Despite the prevailing market conditions, Ch Karnchang is maintaining its revenue target of Bt30 billion for this year, thanks to its Bt110-billion backlog of ongoing work on construction projects that will delivered to customers this year through to the end of 2016, said the chief executive.
The company also expects to sign contracts for new construction projects worth Bt20 billion with customers in the second half of the year. 
In the first quarter, the company recorded revenue from construction business worth Bt8 billion, almost equal to income generated in the same period last year.
Ch Karnchang also joined the bidding for government projects worth Bt85.9 billion this year. These are projects that were approved by the Cabinet before the House was dissolved last October. 
It expects to win at last 20 per cent of the overall business available under these state projects, said Plew.
Meanwhile, shareholders yesterday approved an increase in the overall value of the company’s debentures, from Bt17 billion to Bt25 billion. This will serve business expansion both this year and next. 
“We will wait and see whether to issue a [further] debenture this year, having already issued a debenture worth Bt3 billion in February. We may issue a new debenture worth between Bt2 billion and Bt3 billion in the second half, or maybe next year, depending on the need for capital to serve our business expansion this year and next year,” he said. 
The shareholders’ meeting also approved the payment of an additional dividend of Bt0.42778 per share. Bt0.20 per share was already paid as an interim dividend last October.
The remaining amount comprises a stock dividend – with each 40 existing shares entitling the holder to one share, at an average price of Bt0.025 – and a cash payment of Bt0.202778 per share.