STEC Jumps 4%, Analyst Gives a TP at ฿18.5 on a ฿108Bn Backlog and Better Gross Margin

The share price of Sino-Thai Engineering and Construction Pcl. (STEC) rose ฿0.50/share or 3.76% to ฿13.80/share as of 11:49 local time in Thailand, with a trading value of 352 million baht.


KGI Securities (KGI) sees a strong current backlog of 108 billion baht would sustain STEC’s revenue over the next three years and management, expecting 40 billion baht more from new public project bidding in 2021 such as i) double-track rail (Denchai – Chiang Rai – Chiang Khong and Ban Pai – Nakhon Panom), ii) MRT Orange Line West, iii) MRT Purple Line South, and iv) Don Muang and Suvarnabhumi Airport expansions. 


The contracts to be signed are i) Ayudhya diversion canal (3.4 billion baht), and ii) U-Tapao Airport City Phase I (27 billion baht), upgrading the 2021 – 2022 earnings forecasts by 11.6% and 5.8% as gross margin and revenue assumptions have been raised up. 


KGI maintains a rating of Outperform with a 2021 target price of ฿18.50/share based on PER of 23.8x. STEC is KGI’s top pick in the contractor sector. Market concern about a penalty for the government building project should not be a worry as STEC should eventually extend the contract by another 150 days.

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