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Ch Karnchang keeps revenue, net profit goals for this year

Builder unfazed by doubts over govt's mega-projects

Ch Karnchang is maintaining its 2014 targets for construction revenue of Bt30 billion and net profit margin of 8-10 per cent even though it appears that persistent political turmoil will delay the government's planned transport-infrastructure mega-projects.

In fact, that delay could be helpful in reducing the cost of construction materials, while labour shortages will not be as much of a problem, a company executive said.

"We have a backlog of projects already in the construction process worth Bt120 billion that can generate income for the company until 2016," Vorapote Uchupaiboonvong, executive vice president for accounting and finance, said in a group interview yesterday.

Meanwhile, the company will bid on the rapid-transit system's Green Line from Mo Chit to Khu Khot, a four-contract project worth a total of Bt28.44 billion, that will open to bidding in the first half of this year. In Laos, the company also has subsidiary projects to construct Nam Bak Dam, worth Bt17 billion, and a small power plant worth Bt5 billion. These will help maintain Ch Karnchang's business growth this year, he said.

Besides its investments in Laos, especially in hydropower plants, the company is looking at expanding into other countries in Asean, especially Myanmar, which needs to develop its infrastructure and its electricity grid. That could happen next year, Vorapote said.

To support this year's large investment plan, the company plans to issue a debenture worth Bt3 billion next month, Bt2 billion of which will be used to pay part of a previous debenture that will expire this year. The rest will be for the company's cash flow.

"We believe that our revenue and net profit will achieve the targets this year even if the government's mega-projects are delayed," he said.

However, revenue will be lower than last year's estimated Bt40 billion. In 2013, net profit exceeded Bt8 billion, boosted by special transactions by which it sold shares in its subsidiaries CK Power and Thai Tap Water Supply.

The company reported revenue of Bt33.98 billion and net profit of Bt7.25 billion in the first nine months of last year.

The equity boost last year from its share sales helped lower Ch Karnchang's debt-to-equity ratio from 2.6:1 as of the end of 2012 to 1.5:1 at the end of 2013. This opened room to borrow through both a new debenture issue and bank loans to support its business expansion, Vorapote said.

"We cannot estimate whether the political problem will be prolonged, but we have to manage our business to survive the crisis. A high backlog worth Bt120 billion is enough to drive our business growth at this time when there is still no solution to the country's political troubles," he said.

As well, the expected delay in the government's mega-projects will help construction firms reduce their raw-material costs and the labour shortage, which were their main problems last year, he said.


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