Eastern Water moves to boost spending as Ford, GM drive demand

Investment on water storage and pipelines will rise to about Bt3 billion this year from Bt2.1 billion in 2011, said chief executive officer Praphant Asava-aree. Sales volume increased by 8 per cent to 86 million cubic metres in the first quarter, compared with the company’s estimate of a 3 per cent growth rate, he said.
The company will accelerate the investments to expand water storage and transportation capacity to prevent a repeat of severe shortage, Praphant said in an interview in Bangkok on Monday. Manufacturers in the Eastern region have had a strong recovery in their production after last year’s floods.
Carmakers, petrochemical plants and power producers have raised output as domestic consumption and investments rebound following the country’s worst floods in almost 70 years.
Eastern Water is also benefiting from an increase in industrial activity in Rayong province, where General Motors Co and Ford Motor Co have plants, after some manufacturers partly shifted production there when their factories in the Central region were damaged by the flooding, Praphant said.
Bangkok-based Eastern Water, controlled by the state-owned Provincial Waterworks Authority, sells most of its water to manufacturers in Rayong.
The province, 200 kilometres east of Bangkok, is Thailand’s largest manufacturing hub.
Eastern Water rose as much as 6 per cent to Bt8.90, a record intraday price, and traded at Bt8.85 as of 12.27pm in Bangkok. The shares have climbed 43 per cent this year, compared with a 21 per cent gain in the benchmark SET Index.
The floods that ravaged the Central region and Bangkok between September and November disrupted the supply chains of companies from Apple to Honda Motor Co.
Car production rose 11 per cent to a record 190,935 units in March from a year earlier, the Federation of Thai Industries said on |April 19.
Eastern Water’s profit this year will beat last year’s record because of an increase in water shipment and tariffs, Praphant said.
The company in March raised water tariffs for manufacturers by an average 8 per cent, taking advantage of higher demand, he said.
Net income for the year ended December 31 rose 11 per cent to Bt1.01 billion, the highest since the company listed on the Stock Exchange of Thailand in 1997, according to data compiled by Bloomberg.
Eastern Water will be one of the biggest beneficiaries in a robust growth of industrial activity in the eastern region following the floods, said Siam Tiyanont, an analyst at Phillip Securities (Thailand) in Bangkok.
With more relocation of plants by foreign manufacturers, Eastern Water will have to secure enough supply to meet with the further jump in the water demand.
Eastern Water is also considering building a distillation plant to produce fresh water from seawater, said Praphant.
The facility would reduce the company’s reliance on unpredictable monsoon rains as its main source, he said.