K-Tech targets infrastructure projects

Thai Press Reports, Thailand
August 9, 2004


Section: Corporate News – K-Tech Construction Plc (K-Tech), one of
the country’s leading private sector contractors, said over the
weekend that it was now looking to bid for several government
infrastructure projects estimated to be worth two trillion baht.

Owned by Armenian born Bob Kevorkian, pictured right, K-Tech said the
company’s experience in building high quality offices and malls would
give it the credibility to take on its larger peers in infrastructure
building. Among them are Italian-Thai Development Plc (ITD), Ch
Karnchang Plc (CK) and Sino-Thai Engineering and Construction Plc

“We are confident about our chances since our staff is skilled. I
think this will make us competitive with regards to securing
government infrastructure projects,” the company’s chairman and
managing director told Business Day.

The government recently revealed details on several infrastructure
projects planned for next year. These include an extension of the
271-km subway project, which will require a budget of 500 billion
baht. The bidding process is expected to be concluded by the end of
the year and construction should begin in early 2005, with completion
scheduled in 2010.

Although K-Tech said it will participate in the bidding, it did not
give a projection of what its share will be.

“We will try our best to win part of the project,” he said.

Other local bidders will include ITD, CK and STECON.

Other infrastructure projects that K-Tech is aiming for are those
involving power plants and water treatment facilities.

K-Tech, whose major achievements include the building of Central Rama
II and the ongoing Central World Plaza office complex, said it was
also involved in the construction of malls.

Kevorkian said that he still sees a potential for high-rise office
buildings in Bangkok, since economic expansion has helped boost
demand for office space.

“No new office building has been built in the past six years, so I
think there is demand from both local and international firms,” he

He noted that most of the construction focuses on high-rise
residential buildings.

Thailand’s condominium market has reached a saturation point as
companies such as Sansiri Plc and LPN Development Plc have been
building several of these in the last few years.

K-Tech, he said, will also continue to maintain its market share in
the single-detached houses segment where demand is still strong.

K-Tech’s clients include Carrefour, Central Pattana Plc, Quality
House Plc, Tesco Lotus and Royal Phuket Marina. Close to 60 percent
of its projects involve previous clients.

The company expects to achieve total revenues of 4.5 billion baht
this year, almost double from 2.6 billion baht last year, with gross
margins forecast at 7-8 percent.

It currently has 20 projects on hand, of which 60 percent of revenues
will come from those located in Bangkok.

Some of these large-scale projects include the two-billion baht
Phuket Marina Hotel, Crown Plaza Hotel and Majestic Hotel on
Sukhumvit road.

K-Tech’s backlog this year stands at around 7.8 billion baht.

The company was founded in 1997 during the start of the economic

Kevorkian said that it was the 1.2 billion baht project awarded by
SafeSkin in Had Yai, and other projects such as Garden Hotel on Rama
IX Road and two Carrefour stores, that helped the company survive the

Today, K-Tech has a registered capital of 185 million baht. After the
sale of IPO shares on August 23-24, it will rise to 239 million baht.
Of this amount, 50 million baht will come from the IPO share sale. It
also recently raised four million baht from the sale of four million
units of warrant sales with a maturity period of two years.

The company has about 500 managers and engineers and another 10,000
construction workers.

At the end of June 2004, K-Tech had assets of 1.6 billion baht and a
debt to equity (D/E) ratio of 3.12 times, which will fall to 1.5
times after the IPO share sale.

K-Tech has appointed Ploenchit Advisory as its financial adviser,
while lead underwriters for the sale will be Ayudhya Securities and
SCIB Securities, and eight other securities firms.

IPO shares will be priced at six to eight baht each with a par value
of one baht. Proceeds from the sale will be used as working capital
and for debt payments.

Total funds raised from the issuance are expected to reach 300-400
million baht.

The Kevorkian family holds a 44.55 percent stake in K-Tech. Other
major shareholders include Suprangporn Thumsujrit (18.92 percent),
Thailand Equity Fund (18.92 percent), Adul Amatavivadhan (5.14
percent) and Payap Shinawatra (2.16 percent).

After the IPO share sale, the Kevorkian family’ stake will be diluted
to 35 percent.

From: Emil Lazarian | Ararat NewsPress