08 March 2011
TOYO-THAI LOOKS ABROAD FOR GROWTH
Power projects with local partners mulled
The SET-listed contractor Toyo-Thai Corporation Plc (TTCL) is exploring overseas joint investments in power plant projects in addition to its core construction business, says sales and contract senior vice-president Suvit Manomaiyanon.
The move is part of the company's five-year strategy starting this year to seek growth by investing in power and water plants in Asian countries such as India, Bangladesh and Pakistan.
TTCL plans to invest two billion baht in a 250-megawatt government-owned coal power plant in Bangladesh, in which TTCL will control about half of the venture. The deal is expected to be finalised in the fourth quarter.
It is also considering a 200-300 MW coal power plant in Iraq along with a local partner in the government-owned project. This deal is expected to be finalised next year, and TTCL hopes to own a 49% stake.
Mr nuvit said Toyo-Thai's strong cash flow, currently 1.77 billion baht, was the result of its strength in the past with its integrated engineering and construction business, specialising in engineering design, procurement and construction (EPC) without much competition.
" After studying the best investment options, we decided to assume the roles of contractor and joint investor," said Mr Suvit. " It's not to lower our risks, but rather we have excess cash and we should do something more beneficial [than keeping it in the bank]." Income from joint investments will likely be received in 2013, and Mr Suvit expects revenue from EPC to account for 70% of its total that year, with the rest from joint investment.
TTCL co-invested with Navanakorn Electric Co (NNE) last year in a 110-megawatt power plant worth 4 billion baht, in which TTCL holds 71% of the shares. The plant is expected to be completed in August 2012. Dividends from selling electricity to the Electricity Generating Authority of Thailand (EGAT) of 115 million baht per year will be received from 2013 onward for a period of 25 years, according to its power purchase agreement, said Mr Suvit.
Mr Suvit expects TTCL's revenue this year to grow by 40% to 7 billion baht, up from 5.2 billion last year, a 48% drop from 2009 because of regulatory uncertainties that delayed work at Map Ta Phut. The net profit margin is expected to be 6% this year compared to 6.4% last year.
The company has a backlog of 8.8 billion baht including two major projects in Vietnam worth four billion baht and the NNE power plant, also worth four billion. It will bid on projects worth 60 billion baht this year and next, of which it hopes to win 1.8 billion baht worth of contracts.
TTCL shares closed yesterday on the SET at 8.35 baht, up 10 satang, in trade worth 29.3 million baht.
Source: Bangkok Post
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