Abstract
We estimate that real construction sector growth in 2008 was -4.7%. The
performance of the construction
sector in 2009 is likely to be even worse.
The Thai economy contracted by 7.1% y-o-y in the first quarter
of 2009 and
we foresee the economy shrinking by 4.5% in real terms across 2009 as a whole.
In this
context, we now forecast that Thailand’s construction sector
will shrink by 7.0% in real terms across 2009
as a whole. This marks a
revision of our forecasts from last quarter, when we were predicting that
the
construction sector would contract by 4.3% in 2009. However, we
anticipate that the construction sector –
and the economy as a whole
– will resume (albeit modest) positive growth from 2010, with the
sector
experiencing real growth of 1.1% in 2010 and 1.9% in 2011.
Thailand ranks in lower mid-table regionally for our Project Finance Ratings.
The country is placed ninth
out of 14 countries, a slip from eighth place
since our previous update. Although the country scores
moderately well for
the Design and Construction variable, it is let down by its score for
Commissioning
and Operating. In particular, the country is let down by the
Outputs variable in the transport, utilities and
commercial construction
sectors.
In this quarter’s report, we introduce an evaluation of CH
Karnchang, Thailand’s second largest
construction company. The
company is in a strong position, despite the global economic downturn. It
maintains a solid pipeline of work, both in Thailand and the wider Asia
region, boding well for continued
strong net profits in 2009. Solid
revenue and profits should enable CH Karnchang to continue servicing
its
moderate levels of debt reasonably comfortably, assuming that the global
economic downturn abates
before the end of 2010.
The Thai government
is planning to start a light rail service in Phuket, according to Phuket Wan
in April
2009. The plan was discussed in a meeting between the governor,
the private firm making the proposal,
and leaders from the tourism
industry. The approval is yet to be given for the project. It has been
reported
that the complete network is expected to cost as high as THB52bn
(US$1.6bn). The route is expected to
be 41.4km long. Initial funding to
cover the cost of the project would be obtained through private
investment, with the return expected from tariffs on the routes.
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