Kasikorn Securities (KS) stated that construction contractor groups have entered the government’s budget disbursement season, with investment during October – May remaining robust and significantly improving compared to the previous year, with a continued upward trend.
The securities firm indicated that budget disbursement is likely to peak in the third quarter, while project tenders totaling approximately THB 164 billion are expected to be gradually launched. This will result in a strong profit outlook for the construction sector in the second quarter of 2026.
KS maintains a positive view on the contractor sector and has raised the target prices for CH. Karnchang Public Company Limited (SET: CK) and Stecon Group Public Company Limited (SET: STECON) by 13% and 35%, respectively. This reflects an increase in the price-to-book value (PBV) multiple to support the industry’s upward cycle.
According to data from the Comptroller General’s Department, budget disbursement for the first eight months of the fiscal year 2026 (October 2025 – May 2026) shows regular expenditures at THB 2.2 trillion, or 74.64% of the annual budget, an increase of 7.56% compared to the same period last year. Investment expenditures reached THB 360 billion, accounting for 44.7% of the annual budget (a 9.65% increase year-on-year).
The Ministry of Transport has instructed relevant agencies to expedite budget disbursement and utilize government investment as a key mechanism to drive the economy.
In line with historical patterns, government spending on investment often accelerates in the third quarter. Kasikorn expects the approved government projects with a combined value of THB 164 billion to gradually be open for bidding during the third and fourth quarters. These include the THB 117 billion Thai–Chinese high-speed rail phase 2 project, the THB 31 billion M5 motorway project, and the THB 16 billion M9 motorway project. These factors are anticipated to support new backlog and stock prices during this period.
For profit outlook, the brokerage house expects regular profits of construction contractors in the second quarter of 2026 to remain strong, with growth both year-on-year and quarter-on-quarter, driven by accelerating construction progress.
STECON is supported by dividend income from GULF, and regular profit is projected to rise by 80 – 100%. CK’s profit, however, is expected to decline year-on-year due to decreased profit sharing from CKP. Meanwhile, SEAFCO and PYLON are expected to maintain strong performance due to the Orange Line MRT and private sector projects.
KS maintains its positive outlook for the sector, buoyed by government infrastructure policy, reduced competition in project tenders, potential backlog recovery following a downtrend, and continued momentum in private sector projects.
The analyst has increased the PBV and price-to-earnings ratio (PER) multiples of CK and STECON to reflect the sector’s upward cycle and maintains a “Buy” recommendation for stocks in the sector, selecting STECON and PYLON as top picks.
The broker also raised CK’s target price by 13% from THB 24.77 to THB 27.98 and STECON’s target price by 35% from THB 15.28 to THB 20.62, while maintaining SEAFCO’s target at THB 3.46 and PYLON’s at THB 4.32.
