Tuesday, January 15, 2008

Looks in Cambodia, Laos and Vietnam

Ch. Karnchang to grow in region

Looks in Cambodia, Laos and Vietnam


Opportunities in neighbouring countries are huge, says Mr Prasert.

Ch. Karnchang Plc (CK), Thailand's second-largest construction company, is seeking new opportunities in neighbouring countries as well as work on the government's programme to expand Thailand's rail network.

Due to a slump in the local construction business over the past two years, CK has explored more business opportunities in Laos, Cambodia and Vietnam, said Prasert Marittanaporn, executive vice-president for accounting and finance.

The company is currently developing the 20.4-billion-baht Nam Ngum hydroelectric dam in Laos. Construction is 45% completed and the dam is scheduled to start generating power to the Electricity Generating Authority of Thailand in 2011.

CK has also signed a memorandum of understanding with the Laotian government to construct three more hydroelectric power projects in Laos, with feasibility studies now under way.

Studies should be completed this year for the The Nam Bag 1 and 2 plants, with a combined value of $400 million and capacity to generate 1,080 megawatts, Mr Prasert said.

Another project involving CK is the $1.8-billion hydroelectric power plant in Xayaburi province, with capacity of 1,260 MW.

In Cambodia, CK is in the early stages of a road construction project in Siem Reap.

Meanwhile, the company is close to signing a deal for the construction of a paper mill in Vietnam for Siam Cement, Thailand's biggest industrial conglomerate.

''Business opportunities in the neighbouring countries are huge. Lots of projects are being developed there along with economic developments such as infrastructure and factories,'' Mr Prasert said.

''To bid for projects around Thailand, we have to compete with other major Thai contractors and those from China and Korea, and CK has the capability to do so.''

SET-listed CK, ranked second to Italian-Thai Development (ITD), expects revenue generated from overseas projects to be equal to that from local contracts within two years.

The company's revenue was 18 billion baht in 2006, and in the first nine months of last year it totalled 12 billion, Mr Prasert said.

''Revenue in 2007 is likely to shrink ... as there were no new major construction projects due to political and economic uncertainties,'' he said, adding that the company had targeted revenue of at least 14 billion baht for all of 2007.

''But this year would be better as the new government is expected to kick off mass transit projects to drive economic growth,'' said Mr Prasert.

''And they must do it as construction projects could generate a huge multiplier effect to the economy, especially employment.''

The government has announced plans to spend 150 billion baht on five rail projects around Bangkok.

CK plans to join in bidding for two rail projects likely to be launched this year with a combined value of 80 billion baht, Mr Prasert said.

Bidding terms for the elevated Purple Line, worth 30 billion baht, are scheduled to be released for bidding this month, while the 50-billion-baht Blue Line will follow later this year.

''With our experience of more than 10 years in infrastructure projects, we have not seen any problem joining the bidding for these projects,'' Mr Prasert said. ''As oil prices have kept rising, these rail networks are crucial for the economy and to ease traffic by transporting people who live in the suburbs to central Bangkok.''

At present, Bangkok has three rail lines _ two elevated and one underground, carrying 600,000 passengers a day. By expanding the network, the government hopes to boost traffic to eventually reach one million people daily.

Mr Prasert said CK had also joined with another Thai contractor in the bidding for a 5.8-billion-baht dual-track train line running from Laem Chabang to Chachoengsao province.

The company's shares closed on Friday on the Stock Exchange of Thailand at 7.80 baht, up 10 satang, in trade worth 4.73 million baht.

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