May 09, 2014 00:00 By Somluck Srimalee The Nation 3,052 Viewed
Leading construction companies are expanding their investment in overseas markets and power-plant projects, as Thailand's Bt2-trillion mega-infrastructure programme continues to be delayed by the prolonged political turmoil.
Italian-Thai Development, the Kingdom’s leading construction firm, has successfully pursued new construction projects in Mozambique, Myanmar and India, worth more than Bt150 billion combined.
Ch Karnchang, another listed company and a top-three construction firm, is developing a hydropower plant in Laos worth over Bt50 billion, and is also interested in bidding to construct infrastructure in Myanmar.
Sino-Thai Engineering and Construction, meanwhile, has focused its attention on the development of a Bt20-billion power plant in Thailand, although the listed firm will have to await the next government’s decision before the project can go ahead.
Meanwhile, Demco plans to expand into Laos and Myanmar, where it sees strong construction demand for alternative-power plants and targets Bt5.5 billion of new business this year.
The listed company also plans to complete and deliver projects worth Bt3.5 billion this year, said Phongsak Siricupta, managing director of the listed firm.
“We cannot estimate when the country’s political conflict will end, but we believe new construction projects from both the private and government sectors will be delayed to the extent that the country’s contractor business could drop by up to 70 per cent from the normal average of Bt600 billion a year,” said Ch Karnchang CEO Plew Trivisvavet.
However, Ch Karnchang continues to maintain its revenue target of Bt30 billion for this year, thanks to the company’s Bt110-billion backlog of projects that will be delivered to customers this year through to the end of 2016.
Income will partially come from its new investment overseas, and especially in Laos, where a hydropower plant is being developed in conjunction with its subsidiary, CK Power, which will manage the plant, he said.
The contractor also expects to sign contracts for construction projects worth Bt20 billion in the second half of this year. In the first quarter, the company recorded Bt8 billion in revenue from construction business, which was nearly the same as in the first three months of last year, he added.
Italian-Thai Development president and CEO Premchai Kannasut said the company’s strategy now was to focus on three businesses: construction, infrastructure projects and mining.
In Mozambique, Italian-Thai has signed a Bt120-billion contract to develop 537 kilometres of railway from Moatize to Macuse and a deep-sea port.
The company will also get the concession to operate the railway’s logistics system and the port for 35 years after the project is completed in 2019. It targets an average return on investment from the project of 18 per cent.
Meanwhile, Italian-Thai continues to mine potash in Udon Thani province, and bauxite in Laos.
“All of these projects – Dawei, Mozambique, potash and bauxite mining – will generate long-term income for our business,” Premchai said.
However, construction continues to be the company’s main source of income, as it now has projects valued at Bt144.29 billion both in Thailand and overseas that will generate revenue through 2020.
The company also plans to bid on Bt513 billion worth of domestic infrastructure projects once the political conflict ends and a new government can get going on these.
“During a period when the country cannot have a new government to consider new investment in infrastructure projects, the group has to generate long-term income from our new investment and expand the investment overseas in order to balance our portfolio,” he said.
Up to 80 per cent of Italian-Thai’s revenue is currently from construction business, with 60.6 per cent of that total being from government projects and the remainder from the private sector.
Up to 75.8 per cent is from domestic projects and the rest from overseas, especially India.
Last year, the company recorded revenue of Bt43.91 billion, down 4 per cent from 2012, and net profit of Bt992 million.
Its debt-to-equity ratio is about 4.3:1, with debt worth Bt52.7 billion and equity of Bt12.3 billion as of the end of 2013.