CK targets 15% growth as Xayaburi progresses

Bangkok Post, Published: 25/04/2012 at 02:15 AM

Ch. Karnchang Plc (CK), Thailand’s third-largest contractor by market capitalisation, is aiming at 15% revenue growth, to 15-16 billion baht, this year.

Chief executive Plew Trivisvavet said the 1,280-megawatt Xayaburi hydroelectric dam project on the Mekong River in Laos will generate 30% of the company’s total revenue this year, or about 4.5 billion baht. There are public and media outcries for further study of the Xayaburi dam before construction progresses.

Begun in mid-March, the US$3.8-billion dam project in northern Laos will be a major revenue generator for CK. Construction will take eight years.

The contractor last week informed the Stock Exchange of Thailand that it has signed an engineering, procurement and construction contract worth 51.8-billion-baht ($711 million) with Xayaburi Power.

CK owns 30% of Xayaburi Power.

When the Xayaburi project is included, CK’s backlog totals 140 billion baht. Two more construction projects are scheduled to be signed soon for about 30 billion baht, bringing the backlog to 170 billion baht, said Mr Plew. The anticipated projects are the 25-billion-baht Sri Rat expressway and a small power producer (SPP) plant that is projected to be worth 3 billion baht.

“We are looking to bid on more MRT projects, such as the Pink, Yellow, and Orange Lines, as well as on the Purple Line extension. Other projects include high-speed train lines, motorways and flood-prevention projects,” he said. “It depends on how quickly the government pushes these projects forward. We expect some of them will be started late this year and early next year.”

Mr Plew said this month’s increase of minimum wage to 300 baht a day has pushed up CK’s costs by 3%, but that the company will utilise high-technology construction equipment to lower costs. “We need to increase registered capital,” he added. “It is Xayaburi Power, not CK, which borrows money from banks for the project’s cost.” He said CK’s liabilities are 17 billion baht, including 13 billion of debentures.

Xayaburi Power has signed an 85-billion-baht loan agreement with six banks and also a 29-year power purchase agreement with the Electricity Generating Authority of Thailand.

Prasert Marittanaporn, CK’s managing director, said the contractor plans to submit a filing for its CK Power subsidiary to the Securities and Exchange Commission late in the third quarter. Trading of CK Power shares may begin by the end of the year.

Shares of CK closed yesterday on the SET at 8 baht, unchanged, in trade worth 66 million baht.

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