Govt’s proposed mega projects positive news for construction sector
Stockbrokers say construction stocks will soar if the government’s three mega projects become a reality
Stocks in the construction industry will undoubtedly benefit from the government’s land bridge, Bang Khun Thian land reclamation and entertainment complex projects, with Sino-Thai Engineering and Construction (STEC), CH Karnchang (CK), and Italian-Thai Development (ITD), all of which have consistently demonstrated their capacity to manage large-scale construction projects, well-positioned to bid for contracts, Thai brokers say.
Ratasak Piriyanont, senior executive director at Kasikorn Securities, said the land bridge project is viewed as a positive for both industrial estate and construction stocks, including those of CK, STEC, and ITD.
The Bang Khun Thian land reclamation project is also a positive development for these three construction giants.
Natapon Khamthakrue, director of Securities Analysis at Yuanta Securities (Thailand), said he believed all three projects would significantly boost GDP due to their long-term nature and massive investment value. When Thailand invests in government mega projects, GDP growth can reach 4-5% (YoY), higher than the 10-year average growth of just 2.5% per year. He sees the construction sector as particularly promising, with CK and STEC stocks benefiting the most.
Piriyapon Kongvanich, head of Fundamental Research at Bualuang Securities, meanwhile, noted that the three projects would have positive medium- to long-term impacts. The entertainment complex, if realised, would benefit the tourism sector, with the first beneficiaries being the construction companies, followed by system installation contractors, hotels, restaurants, shopping malls, airports, and spa businesses.
“As for the land bridge, both large and small construction companies will benefit from the scale of the project. However, the feasibility of the Bang Khun Thian land reclamation project remains uncertain,” he added.
Prakit Sirivattanaket, managing director of Merchant Partners Asset Management, remarked that the Land Bridge project may be difficult to implement due to its substantial funding requirements, with no concrete investors yet confirmed. However, the entertainment complex is garnering interest and could generate revenue for the government. Previously ITD’s stock benefited the most from government projects, he noted, but its current lack of liquidity makes CK, with its strong liquidity and diversified business interests, the more attractive construction stock. He added that the Bang Khun Thian land reclamation project is essential due to climate change and environmental issues.
Gun Hathaisattha, a strategist in economic and investment analysis at CGS International Securities (Thailand), added that these three major projects will positively impact construction stocks in both the short-term fundamentals and investment sentiment. Construction materials, hotels, and restaurants will also benefit, followed by related sectors like ports, transportation and airports.
