CK looking to more work in Laos

CH Karnchang, the country’s second-largest listed construction company by revenue, expects to bag more infrastructure construction deals worth billions of baht from Laos next year. 
Chairman Pliew Trivisvavet said yesterday that the Laotian government would like the company to continue investing in infrastructure projects after it was proved to be a long-term and fair investor in the first two projects. 
However, Pliew declined to elaborate on additional projects to be granted by the Laotian government, saying this would be made known next year.
The first two hydroelectric ventures were the Bt30-billion Nam Nguan 2 project and the Bt126-billion Xayaburi run-of-river project, whose construction is about 70 per cent complete.
The company’s sales this year are expected to be solid after enjoying a dramatic surge of 48.3 per cent in the third quarter, mainly due to winning three contracts worth Bt47 billion for the MRT Orange Line (East) project.
“So we are confident that CK’s backlog will reach Bt100 billion by the end of this year, bringing full-year revenue to between Bt42 billion and Bt45 billion,” he said. 
The company’s gross profit margin would be 8-10 per cent.
Pliew said 2017 “will be the golden year of construction” as the government gradually implements its infrastructure projects. 
CK expects the government to push for projects worth more than Bt400 billion. They are likely to include the MRT Orange Line (Taling Chan-Cultural Centre) and Purple Line (Tao Poon-Ratchburana) projects. 
“The [projects are] sizeable enough for participation from both domestic and foreign contractors,” he said. 
CK has set a target for winning 20-25 per cent of the total project value.
The company’s targets for next year have been set at a minimum of Bt35 billion in revenue and a Bt71.28-billion backlog. It is ready to participate in any bidding for new projects, he said. 
Supamas Trivisvavet, chief executive officer of Ch Karnchang, said the company had been able to maintain a good level of profitability thanks to timely progress in its construction work and growing contributions from its expanding subsidiaries.
The civil engineering work for the MRT Blue Line Extension (Sanam Chai-Tha Phra) is nearly complete, while the double-tracking project for the Chira-Khon Kaen railway sector is 9 per cent complete.
Contracts for nine projects worth Bt24.32 billion have just been signed, such as additional construction of CK Power’s hydropower project, the No 7 motorway project (Pattaya-Map Ta Phut) and the No 9 motorway project (Bang Pa In-Saraburi-Nakhon Ratchasima), Supamas said.
“Not only is CK’s strong point diversification into other fast-growing businesses, the company also emphasises technology and engineering development as well as budget control in a bid to keep good profitability,” she said.
Prasert Marittanaporn, another senior CK executive, said the company still had room to take on debt. It can raise funds by both issuing debentures and borrowing from banks to handle more projects in the future. 
The company’s debt-to-equity ratio is still manageable at only 1.4-1.5 times. 
Debenture issuance might be considered by early next year, but the recent increase in the United States’ federal funds rate will be taken into account, since this would tend to push the yield curve up, he said.