Ch. Karnchang: Riding the next construction upcycle
- Management targets 2026 revenue of >THB40bn with GPM at 7–8%
- Benefiting from over THB770bn of mega projects up for bidding, including high-speed rail, double-track railway, motorway, and expressway projects
- Expect 1Q26F earnings to be flat y/y but decline q/q due to lower equity income on seasonality
- Maintain BUY with an SOP-based TP of THB23.00
Key takeaways from 4Q25’s analyst meeting on 27 February 2026 : overall tone is positive
Recap 4Q25 earnings. CK reported 4Q25 earnings of THB444mn (turnaround from loss of THB152mn in 4Q24 and -74% in 3Q25). Exclude extra item, CK’s core profit came in at THB434mn (turnaround from loss of THB152mn in 4Q24 and -60% in 3Q25). The strong y/y growth was driven by: i) robust construction revenue of THB11bn (+11% y/y, -5% q/q), ii) higher equity income of THB557mn (+86% y/y and -25% q/q), and iii) lower Interest expense.
Management has provided a 2026 revenue target of >THB40bn, in line with our assumption, with GPM expected to be around 7–8% (vs. 7.6% in FY25), supported by progress on high-margin projects such as the MRT Orange Line, MRT Purple Line, double-track railway, and the Luang Prabang Hydroelectric Power project.
Management’s earnings guidance for FY26F
FY26F | Management guidance | Our assumption |
| Revenue (THB) | >THB40bn | THB45bn (+3% y/y) |
| GPM (%) | 7-8% | 7.5% |
Source: CK, DBSVTH
Huge backlog on hand to secure revenue visibility for the next four years. Although CK did not secure any new projects in 2025, it has a substantial backlog to cushion potential bidding delays. Its current backlog stands at THB168.9bn, providing revenue visibility for the next four years. The company plans to participate in mega infrastructure project tenders during 2026–2028 and expects to secure new projects worth THB261bn.
CK’s backlog (THB mn)
Source: CK, DBSVTH
Positive outlook on construction business amid upcoming mega project pipeline. CK’s management maintains a positive view on the construction sector, expecting a wave of public mega infrastructure projects to be gradually tendered during 2026–2028, similar to the 2016–2017 cycle. CK is expected to benefit from the upcoming THB770.9bn infrastructure bidding pipeline and targets securing around 25–30% of the total project value, or approximately THB260.9bn. Key priority projects include the Double Deck expressway project worth THB35bn and the MRT Purple Line (South) M&E works worth THB30bn, both of which are expected to conclude within this year.
Future project timeline
Source: CK, DBSVTH
Less intense competition in upcoming bids. Management expects bidding competition to be less intense, as ITD is facing liquidity constraints. In addition, the 2026–2028 project pipeline is likely to focus primarily on local contractors, making it more difficult for overseas contractors to participate in the bidding process.
Update on sinkhole incident at Vajira Station. The cause of the sinkhole is currently under investigation by the MRTA, although it is likely related to the recent earthquake. CK expects all repair works to be completed within 1–1.5 years and does not anticipate any impact on the construction timeline, with the MRT Purple Line (South) still scheduled for completion by end-2027. The repair costs are not expected to affect the project’s baseline GPM, as insurance will cover the majority of the damages.
Outlook
FY2026 outlook. We expect FY2026 core profit to remain flat y/y, while net profit is projected to decline 21% due to the absence of divestment gains from the Luang Prabang Hydropower Plant (LPCL). The key drivers are revenue growth of 3%, a GPM of 7.5%, and an SG&A ratio of 5.3%. For 1Q26F, we expect CK’s earnings to be flat y/y but decline q/q due to lower equity income from CKP on seasonality.
Attractive valuation. We derive CK’s TP of Bt23.00 using the SOTP valuation (vs. Bt21.00 previously). We assume a 20x FY26 PE for its construction business and apply a 20% discount to the market value of its investment portfolio. We see CK’s valuation as attractive, as its current stock price implies a 45% discount, based on the current market value of its associates.
Maintain BUY with TP of Bt23.00. We see a brighter outlook for the construction sector in 2026–2028, with over Bt770.9bn of infrastructure and mega projects expected to be up for bidding. There is potential for CK to re-rate based on (i) solid earnings growth outlook in FY24F–FY25F; (ii) THB65bn of projects to be signed, including the Double Deck expressway and MRT Purple Line (South) M&E works; and (iii) earnings support from its associate companies.
SOTP valuation
Unit: Btm | |
| FY26F Net profit | 2,631 |
| Associate income | 2,135 |
| Net profit of core business | 496 |
| Assigned PE at 23.0x (+0.5 S.D. above average mean) | 23 |
| Value of CK's construction business | 11,409 |
| Bangkok Expressway and Metro PCL (43.15% stake) | 65,955 |
| TTW PCL (19.40% stake) | 7,895 |
| CK Power PCL (30.00% stake) | 8,535 |
| Value of CK's investments - 20% holding discount applied | 65,909 |
| Total | 77,318 |
| Est. debt | -38,594 |
| Total NAV | 38,724 |
| No. of shares (m) | 1,694 |
| Sum-of-parts per share (Bt) | 23.00 |
Source: Company, DBSVTH
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