TRIS Rating Co., Ltd. has affirmed the company rating of CH. Karnchang PLC (CK) and the ratings of its current debentures (CK07OA, CK09OA, and CK09OB) at "A-". At the same time, TRIS Rating assigns the ratings of "A-" to the company's three proposed senior debenture (CK#1/2005, CK#2/2005 and CK#3/2005) issues. The rating outlook remains "stable". The ratings reflect CK's leading position in Thailand's engineering and construction (E&C) industry, its proven record in government infrastructure projects, its recurring income from its concession investments and the upcoming infrastructure projects. These strengths are partly offset by the cyclicality of the E&C industry, increasing risks from rising construction material prices, and the company's highly-leveraged balance sheet.
While the "stable" outlook reflects the expectation that CK will continue to maintain its competitiveness in government infrastructure projects. CK's proceeds from capital increase and divestment of its concession companies are expected to lower its debt to equity ratio to less than two times by the end of this year.
TRIS Rating reported that CK is one of the top three construction contractors in Thailand. Public construction projects are CK's prime revenue earners, contributing more than 50% of total construction revenues over the past ten years. As of May 2005, CK's backlog amounted to Bt24,215 million, increasing from Bt7,013 million at the end of 2003. The South Outer Ring Road Project accounts for 58% of its entire backlog. The current backlog should secure its revenues for at least two years.
CK has diversified its sources of cash flow by investing in concession investment. Concession investments provide a more stable and predictable source of income that is not affected by construction industry cycles. As of March 2005, its concession investments were worth Bt8,030 million. The investments include 15.56% holding in Bangkok Expressway PLC (BECL) (Bt2,421 million), 29.36% holding in Bangkok Metro Co., Ltd. (BMCL) (Bt2,579 million), 29.1% holding in Pathum Thani Water Co., Ltd. (PTW) (Bt357 million) and 49.99% holding in Thai Tap Water Co., Ltd. (TTW) (Bt2,673 million). BECL contributed Bt110 million in dividend income in 2003 and Bt274 million in 2004.
As of March 2005, CK's total debt was Bt13,338 million, a significantly increase from Bt6,163 million as of December 2003. This rise was partly as a result of additional investment in its concession companies of Bt2,000 million and Bt2,500 million in new debt from its South Outer Ring Road construction project. Looking forward, CK's leverage level would improve because the company plans to increase its equity base and divest part of its concession investments, TRIS Rating said. -- End
Company Rating: A- Issue Ratings: CK07OA: Bt2,000 million senior debentures due 2007 A- CK09OA: Bt120 million senior debentures due 2009 A- CK09OB: Bt880 million senior debentures due 2009 A- CK#1/2005: Bt200 million senior debentures due 2007 A- CK#2/2005: Bt1,100 million senior debentures due 2010 A- CK#3/2005: Up to Bt1,700 million senior debentures due 2008 A- Rating Outlook: Stable
While the "stable" outlook reflects the expectation that CK will continue to maintain its competitiveness in government infrastructure projects. CK's proceeds from capital increase and divestment of its concession companies are expected to lower its debt to equity ratio to less than two times by the end of this year.
TRIS Rating reported that CK is one of the top three construction contractors in Thailand. Public construction projects are CK's prime revenue earners, contributing more than 50% of total construction revenues over the past ten years. As of May 2005, CK's backlog amounted to Bt24,215 million, increasing from Bt7,013 million at the end of 2003. The South Outer Ring Road Project accounts for 58% of its entire backlog. The current backlog should secure its revenues for at least two years.
CK has diversified its sources of cash flow by investing in concession investment. Concession investments provide a more stable and predictable source of income that is not affected by construction industry cycles. As of March 2005, its concession investments were worth Bt8,030 million. The investments include 15.56% holding in Bangkok Expressway PLC (BECL) (Bt2,421 million), 29.36% holding in Bangkok Metro Co., Ltd. (BMCL) (Bt2,579 million), 29.1% holding in Pathum Thani Water Co., Ltd. (PTW) (Bt357 million) and 49.99% holding in Thai Tap Water Co., Ltd. (TTW) (Bt2,673 million). BECL contributed Bt110 million in dividend income in 2003 and Bt274 million in 2004.
As of March 2005, CK's total debt was Bt13,338 million, a significantly increase from Bt6,163 million as of December 2003. This rise was partly as a result of additional investment in its concession companies of Bt2,000 million and Bt2,500 million in new debt from its South Outer Ring Road construction project. Looking forward, CK's leverage level would improve because the company plans to increase its equity base and divest part of its concession investments, TRIS Rating said. -- End
Company Rating: A- Issue Ratings: CK07OA: Bt2,000 million senior debentures due 2007 A- CK09OA: Bt120 million senior debentures due 2009 A- CK09OB: Bt880 million senior debentures due 2009 A- CK#1/2005: Bt200 million senior debentures due 2007 A- CK#2/2005: Bt1,100 million senior debentures due 2010 A- CK#3/2005: Up to Bt1,700 million senior debentures due 2008 A- Rating Outlook: Stable