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CH. Karnchang Breaks its Profit Record, with Confidence in BMCL's Capital Increase, and Gearing up for Rail Transit and Hi-Speed Train Projects

BackOct 14, 2013

Mr. Plew Trivisvavet, President and Chief Executive Officer of CH. Karnchang Public Company Limited (CK), revealed that currently, CK is so stable and strong, and he is confident that in 2013, CK would make history by generating new high revenues and profits from construction and various investments. It is expected to derive a total revenue of approximately Baht 9,000 million in this third quarter of 2013, and more than Baht 36,000 million for the entire year, with a gross profit of approximately 8-10 percent. The Company’s backlog for its core construction business is worth more than Baht 126,000 million, which would generate more than Baht 30,000 million of revenue each year during the next 4-5 years, not to mention other new projects. The Company’s large-scale construction projects, such as, the Xayaburi Run-of-River Project in the Lao PDR, the Si Rat - Outer Ring Road Expressway Construction Project, the MRT Green Line Construction Project, the MRT Blue Line Construction Project, and the MRT Purple Line Construction Project, have shown substantial progress. Such companies invested by CK, namely, Bangkok Expressway Public Company Limited (“BECL”), Thai Tap Water Supply Public Company Limited (“TTW”), and CK Power Public Company Limited (“CKP”), have demonstrated outstanding performance and regularly generated profit and dividend to CK, and as such, CK’s investment value has increased dramatically, save for BMCL which remains at a loss.

Mr. Plew confirms that CK is fairly confident in BMCL’s capital increase of Baht 8,550 million, in which CK would acquire its capital increase shares through private placement in the amount of Baht 4,200 million (Baht 1 per share), and would certainly exercise its right as an existing shareholder to acquire the capital increase shares in the amount of Baht 2,000 million through the Right Offering. This capital increase is significantly beneficial to BMCL to utilize the proceeds to repay debts and increase its equity, with the remainder sufficient to cover its operating expenses. Currently, BMCL’s results of operations have improved remarkably. Despite its operating loss, it is expected to start generating profits in 2016 from increasing fare box revenues and commercial development revenues. With the earlier opening of the MRT Purple Line Project for service, BMCL’s revenues and profits would increase significantly. In this MRT Purple Line Project, CK is also engaged by BMCL for the supply and installation of the M&E Systems. Moreover, BMCL’s strengthened equity would help minimize its finance cost and equip itself for bidding in rail transit projects in the future, particularly the MRT Blue Line Extension Project, Hua Lamphong – Tha Phra – Bang Sue Section, an extension from the MRT Blue Line Project as currently operated by BMCL, which is now pending the consideration of the Private Sector Selection Committee; the MRT Green Line Project, Bearing – Samut Prakan Section, and the Pink Line Project as a monorail system which is less complicated than the heavy rail as currently operated by BMCL.

With its significant growth and strength, as evidenced by the net profit of Baht 6,318 million in the first half of this year, CK’s shares are very attractive to general and institutional investors both in the country and abroad. Its P/E currently stays at approximately 5.64 times, which is relatively lower than average in the SET. Several securities companies affirming their “buy” recommendations are, for example, KKTrade Securities Company Limited, at the target price of Baht 34.50; AIRA Securities Public Company Limited, at the target price of Baht 34.00; SCB Securities Company Limited, at the target price of Baht 30.00; Asia Plus Securities Public Company Limited, at the target price of Baht 28.50; Thanachart Securities Public Company Limited, at the target price of Baht 27.00; and Krungsri Securities Public Company Limited, at the target price of Baht 27.00. KKTrade Securities Company Limited explains its reason that other than CK’s ongoing projects which lead to its increasing backlog, in the third quarter of 2013, certain profits of approximately Baht 300 – 400 million from CKP’s listing will be recorded. One of the positive factors which makes CK attractive is the engagement opportunity with the public sector in the future, particularly, the Two-Trillion-Baht budget, which, once approved, CK is one of the three major contractors with potential for new projects. Moreover, certain private sector projects remain to materialize, e.g., the Baht 17,000 million Nam Bak Dam Project, with progress to be realized during the next six months. We remain firm with our “buy” recommendation. Krungsri Securities Public Company Limited anticipates that CK’s net profit in 2013 will materially increase 12 times from 2012, due to the following driving factors: 1) extra gain of approximately Baht 350 million; and 2) increasing revenue from construction business. Asia Plus Securities Public Company Limited clarifies that CK’s profits for the third quarter of 2013 is likely to stay outstanding both for its ordinary course of business and extra gain from CKP.

 

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Mass Rapid Transit System

The Maintenance Contract for Civil & Arch Infrastructure Package 4

(Bangkok)
Owner : Bangkok Metro Company Limited
Finish
Finish 2011
Start
Start 2004
Expense
Expense 85 MB
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(Bangkok)
Owner : Mass Rapid Transit Authority of Thailand
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Finish 2002
Start
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Expense
Expense 2,815 MB
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(Bangkok)
Owner : Mass Rapid Transit Authority of Thailand
Finish
Finish 2003
Start
Start 1996
Expense
Expense 25,810 MB
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