Kasikorn Securities provides an analysis on Ch. Karnchang Public Company Limited (SET: CK) following the massive sinkhole in Bangkok that could impact the progress of the construction of the MRT Purple Line. The firm reiterates a “BUY” recommendation with a target price at 21.50 Baht, representing a 37% upside from current trading price.
Key Points:
- CK and the Mass Rapid Transit Authority of Thailand (MRTA) are currently assessing the extent of damage and the repair timeline after a sinkhole was discovered at the MRT Purple Line construction site. CK has comprehensive insurance coverage (100%) for all risks on the project worth 13 billion baht. No major delays to the overall project are expected.
- CK will record repair costs for the sinkhole based on its 55% holding in the CKST-PL joint venture (JV).
- This issue will not affect the progression of other projects or contracts under the MRT Purple Line.
- CK anticipates new government projects in Q4/2025–Q1/2026, including the State Railway of Thailand’s Red Line suburban train project (15 billion baht), the Kathu-Patong Expressway project (15 billion baht), and the double-decker expressway (3.5 billion baht).
MRT Purple Line Sinkhole Incident: Although the total damage from the sinkhole incident remains unclear, a portion of the downside has already been priced into CK’s stock price. For comparison, the cost to repair the Bang Nong Bon (BNB) project by STECON was roughly 1.6 billion baht, equivalent to about 1 baht per CK share. Since the sinkhole incident, CK shares fell by 2 baht. The situation is expected to resolve faster than the BNB project due to coordination with MRTA, the Bangkok Metropolitan Administration, and other agencies. However, a detailed assessment from CK is still needed to determine the full extent of the damage.
Outlook: Kasikorn Securities expects CK to achieve its highest normalized profit in Q3/2025 at 749 million baht (+10% YoY, +2% QoQ), supported by progress on current projects, dividend income, and typical high-season contributions from equity income in CK Power (CKP) and Bangkok Expressway and Metro (BEM). Revenue in Q4/2025 should remain robust and grow slightly quarter-on-quarter. The sinkhole incident will not impact revenue but will affect COGS (Cost of Goods Sold). Although the exact damage value is unclear, the downward interest rate trend will have limited impact on CK’s interest expenses, since about 75% of CK’s loans are at fixed rates. The company continues to push for construction progress.
Valuation and Recommendation: Kasikorn Securities reiterates “Buy” recommendation for CK with a target price of 21.50 baht. The securities company has a positive view on CK’s earnings outlook for Q3/2025, supported by a strong backlog, even though normalized profit in Q4/2025 will be affected by the sinkhole incident. CK’s all-risk insurance covers all damages. A key upside is the expected acceleration of new government project tenders after the formation of the new government, with nearly 80% of CK’s backlog coming from public sector projects.
- Valuation Breakdown: The 21.50 baht target price consists of 32.06 baht in investment value and -10.52 baht in asset revaluation. Based on current market asset prices, the average target price would be 15.20 baht. CK is currently trading below 1x forward P/BV and at a 38.9% holding company discount, higher than the historical average of 32.9%.
Key Risks: 1) Escalating construction costs, 2) political uncertainty, and 3) construction risks in the MRT Orange Line project.
