Credit Rating

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TRIS Rating affirms the company of
CH. Karnchang PLC (CK)

at "A-/stable"

TRIS Rating affirms the company and current senior unsecured debenture ratings of CH. Karnchang PLC (CK) at "A-". At the same time, TRIS Rating assigns the rating of "A-" to CK's proposed issue in senior unsecured debentures, following an increase in the issue size to Bt4,500 million from the original Bt4,000 million. The Bt500 million increase will have no impact on the previously assigned ratings of CK. CK plans to use the proceeds from the new debentures to repay maturing debts and to fund its expansion plans. CK's credit ratings reflect the company's leading position in Thailand's engineering and construction (E&C) industry, its proven record of completing infrastructure projects and specialized construction projects, as well as the synergy and financial flexibility the company gains from its strategic investments. These strengths are partially offset by the cyclical nature of the E&C industry, the inherent risk of fixed-price contracts, and the company's high financial leverage.


Rating Outlook

The "stable" outlook reflects expectations that CK will remain highly competitive in securing new projects and will be able to sustain its operating margins above 7% on average. The company's working capital for the Xayaburi project is also expected to improve over time. The credit upsides are the case that CK could generate stronger-than-expected cash flows and backlog, as well as maintain its debt to capitalization ratio below 60% for sustained periods. The credit downsides are significant cost overruns for major projects or unexpected sizable cross financial supports or investments between CK and its associates that exert pressures on CK's cash flows.

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CH. KARNCHANG PLC.
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CH. Karnchang
02 Construction
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