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08 March 2011

TTCL HOPES FOR HIGHER STAKE

Toyo-Thai Corporation (TTCL), an integrated construction and engineering contractor, will welcome an increase in the shareholding ratio of Chiyoda Corporation, the second-largest construction company in Japan, once the 49-per-cent foreign-ownership limit is relaxed.

"The arrival of Chiyoda will also support TTCL's business," Suvit Manomaiyanon, TTCL's senior vice president of sales and contracts, said yesterday.

Chiyoda has acquired 7 per cent of TTCL from Italian-Thai Development (ITD), the second-largest shareholder in TTCL. Chiyoda can send its representative to sit on TTCL's board of directors.

ITD wanted to end its role as a major shareholder by selling its entire 10.83-per-cent stake to Chiyoda, but the foreign-ownership limit of 49 per cent prevented the full transaction, so ITD still retains  3.83 per cent of TTCL.

However, if the limit is eased, TTCL is ready to embrace the Japanese firm if it wants to increase its ownership.

TTCL and Chiyoda have jointly bid for the construction of a chemical plant in Indonesia worth Bt2 billion, with TTCL responsible for providing machinery and Chiyoda for construction. The result is expected to be known next month.

The company wants to diversify into the electricity and tap-water businesses by setting up a joint venture or acquiring shares in those businesses.

" We look forward to dividends from being a shareholder, and to recognise revenue from the construction project including revenue from machinery procurement. We want to invest in many countries such as India, Pakistan and Bangladesh," Suvit said.

" For Bangladesh, we have bid for a coal-fired power plant with a capacity of 250 megawatts. This project requires an investment of Bt2 billion. We expect to know the bidding result in the fourth quarter of this year. The project bidder in Bangladesh is a joint venture with a local partner."

The model for investment in Bangladesh is the same that TTCL used for Navanakorn Electric. TTCL holds 71 per cent of Navanakorn Electric. The project is expected to generate electricity this August, and yield dividends of about Bt115 million per year.

" Electricity and tap water bring sustainable revenue, while revenue from construction fluctuates with the economic situation," he said. " Diversification will lead to sustainable returns. Revenue will be split 30:70 between the joint investment in electricity and tap-water businesses and the construction business."

For the construction business this year, TTCL projects revenue to grow by 40 per cent to Bt7 billion from Bt5.2 billion last year.

Its net profit margin would drop to 6 per cent from 6.4 per cent in 2010 because of higher costs.

It has a backlog of Bt8.8 billion, with Bt5 billion to be booked as revenue this year and the rest next year.

TTCL plans to tender this year through next year for work worth Bt60 billion, Suvit said.

Source: The Nation

 

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