Contents
Sector snapshot 3
Our top pick is CH. Karnchang, followed by Sino-Thai Engineering and Italian-Thai
Development.
3
Look on the bright side 5
We believe large contractors such as CK, STEC and ITD are prime beneficiaries of
the upcoming mega projects and the decline in the prices of construction materials.
The sector has underperformed the SET ytd and relative valuation looks attractive
to us.
5
Confirmation of stimulus package should be a key catalyst 5
Our top pick is CK, followed by STEC and ITD 6
Stronger ROE should support a re-rating 7
Key catalysts and risks to our central scenario 8
Thai construction industry 9
ITD, STEC and CK are the first and the biggest construction companies in Thailand.
We expect their share prices to get support from upcoming mega projects under
SP2, the drop in construction materials prices and improved macroeconomic
figures. Overweight.
9
History 9
Thai basic infrastructure 10
Mass rapid transit plan 11
‘Strong Thailand’ stimulus package (SP2) 13
A substantial decline in construction-materials prices 14
Macroeconomic figures showed some improvements 16
Key risks to contractors 17
Company profiles 18
CH. Karnchang 19
Italian-Thai Development 32
Sino-Thai Engineering & Construction 42
2
Construction & Eng | Executive Summary | 20 August 2009 3
Sector snapshot
Our top pick is CH. Karnchang, followed by Sino-Thai Engineering and Italian-Thai
Development.
Table 2 : Sector – recommendations and valuations
CH. Karnchang Italian-Thai Development Sino-Thai Engineering
Share price chart
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CK 60days MA
B