Company Coverage
CH. Karnchang (CK TB): Stable Margins; Strong Backlog Despite Project Delays
BUY (Maintained)
Current price:
Target price:
Upside:
Bt19.20
Bt27.00
40.63%
Analyst
Analyst
Panjarat Thaweesriprasert
Highlights
- We attended CK’s analyst meeting, which had a neutral tone.
- Project delays may weigh on near-term growth, but CK’s strong backlog and upcoming infrastructure pipeline support earnings visibility.
- Maintain BUY with an unchanged target price of Bt27.00.
Analysis
- Neutral tone from the meeting. We attended CH. Karnchang’s (CK) 2Q26 analyst meeting, which had a neutral tone. The company maintained its gross margin target of 7-8% and revenue over Bt40b for 2026.
- Gross margins are expected to be maintained at 7-8%. The pick-up in 2Q26 construction gross margin from 7.4% in 1Q26 to 8.1% in 2Q26 was
driven by three factors: a) better product mix, b) projects that were almost completed and had K-value (a formula to adjust payments costs change), and c) better cost management. However, CK does not expect 2H26 gross margin to remain at the high levels seen in 2Q26, with the company expecting 2H26 gross profit margin to return to the 7-8% range.
- Healthy backlogs despite no new orders signed. At the end of 2Q26, CK had a backlog of Bt146.3b, with no new projects signed during the quarter. According to CK, many target projects are expected to be delayed by around one quarter from the timeline that was set during the 1Q26 analyst meeting. CK expects around four projects that could potentially be open for bidding in 2026, including Double Deck (Ngam Wong Wan-Rama 9), Motorway M5, Suvarnabhumi Airport East Expansion, and SRT Double Track Phase 2 (Chumphon-Surat Thani, Surat Thani-Hat Yai-Songkhla, and Hat Yai Junction-Padang Besar), with total project value expected to exceed Bt184b. However, given the delays in project progress, we expect only M5 and Suvarnabhumi Airport East Expansion, with a combined value of around Bt43b, to open for bidding this year. The other projects are likely to be postponed and open for bidding in 1H27.
- Share of profit increased. Profit contribution from Bangkok Expressway and Metro (BEM) increased significantly to Bt404m from Bt276m in 2Q25, mainlydue to lower elimination of intercompany transactions. As some deferred profit from both new and existing projects has been recognised, the amount of profit subject to elimination was lower than the historical average. The company sees no significant impact on CK’s earnings from this accounting adjustment.
Highlights
- We attended CK’s analyst meeting, which had a neutral tone.
- Project delays may weigh on near-term growth, but CK’s strong backlog and upcoming infrastructure pipeline support earnings visibility.
- Maintain BUY with an unchanged target price of Bt27.00.
Analysis
- Neutral tone from the meeting. We attended CH. Karnchang’s (CK) 2Q26 analyst meeting, which had a neutral tone. The company maintained its gross margin target of 7-8% and revenue over Bt40b for 2026.
- Gross margins are expected to be maintained at 7-8%. The pick-up in 2Q26 construction gross margin from 7.4% in 1Q26 to 8.1% in 2Q26 was
driven by three factors: a) better product mix, b) projects that were almost completed and had K-value (a formula to adjust payments costs change), and c) better cost management. However, CK does not expect 2H26 gross margin to remain at the high levels seen in 2Q26, with the company expecting 2H26 gross profit margin to return to the 7-8% range.
- Healthy backlogs despite no new orders signed. At the end of 2Q26, CK had a backlog of Bt146.3b, with no new projects signed during the quarter. According to CK, many target projects are expected to be delayed by around one quarter from the timeline that was set during the 1Q26 analyst meeting. CK expects around four projects that could potentially be open for bidding in 2026, including Double Deck (Ngam Wong Wan-Rama 9), Motorway M5, Suvarnabhumi Airport East Expansion, and SRT Double Track Phase 2 (Chumphon-Surat Thani, Surat Thani-Hat Yai-Songkhla, and Hat Yai Junction-Padang Besar), with total project value expected to exceed Bt184b. However, given the delays in project progress, we expect only M5 and Suvarnabhumi Airport East Expansion, with a combined value of around Bt43b, to open for bidding this year. The other projects are likely to be postponed and open for bidding in 1H27.
- Share of profit increased. Profit contribution from Bangkok Expressway and Metro (BEM) increased significantly to Bt404m from Bt276m in 2Q25, mainlydue to lower elimination of intercompany transactions. As some deferred profit from both new and existing projects has been recognised, the amount of profit subject to elimination was lower than the historical average. The company sees no significant impact on CK’s earnings from this accounting adjustment.
BUY (Maintained)
Current price:
Target price:
Upside:
Bt19.20
Bt27.00
40.63%
Analyst
Analyst
Panjarat Thaweesriprasert
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