Asia Plus Securities stated in a research note dated October 6 that CH. Karnchang Public Company Limited (SET: CK) is poised to benefit from the water management infrastructure investment theme following government approval of the Chai Nat-Pa Sak-Gulf of Thailand flood drainage canal project, valued at approximately THB 165 billion.
The analyst views CK as holding a competitive advantage due to its direct experience in large-scale drainage canals and water conveyance systems, such as the Bang Ban-Bang Sai flood drainage canal project with associated structures and the Bang Mot-Samrong pumping station water conveyance tunnel project, which serve as key track records in water management and enhance its opportunities to secure large water projects in the future.
Meanwhile, flood conditions in several areas have not had a significant impact on CK’s operations, with major construction projects—including the MRT Orange Line West, the Den Chai-Chiang Khong dual-track railway, and the Luang Prabang project—continuing as planned. Material transportation and construction activities remain normal, keeping the construction revenue outlook for the second half of 2026 strong and supporting backlog revenue recognition in line with targets.
Asia Plus views the 165-billion-baht water management project not only as a new contract opportunity for CK, but also as a reflection of government investment shifting from rail and transport infrastructure toward water management, after transportation projects absorbed the bulk of investment budgets in recent years.
If the project moves forward as planned, it could mark the start of a long-term pipeline of major water projects, expanding growth options for construction contractors beyond the rail, road, and transport infrastructure projects that currently form the core theme.
Regarding CK’s third quarter of 2026 earnings outlook, the analyst estimates this will be the strongest quarter of the year, preliminarily projecting net profit in the range of THB 1-1.2 billion. This performance is expected to be driven by strong growth momentum in construction revenue, alongside peak seasonal profit contributions from Bangkok Expressway and Metro Public Company Limited (SET: BEM) and CK Power Public Company Limited (SET: CKP).
Additionally, CK will recognize dividend income from TTW Public Company Limited (SET: TTW), as well as an extraordinary pre-tax gain of approximately THB 281 million from the sale of BEM shares, serving as another supporting factor for quarterly performance.
Looking ahead, the brokerage sees opportunities for CK to secure additional contracts across several projects, including water management, the second stage expressway, the MRT Southern Purple Line, and government megaprojects expected to gradually go up for bidding during 2027 – 2028, while a high backlog level continues to underpin revenue growth over the next several years.
Overall, Asia Plus considers CK to be among the key beneficiaries of the government’s infrastructure investment cycle due to its balanced revenue structure between construction operations and investments in BEM, CKP, and TTW, maintaining a “Buy” rating with a 2027 target price of THB 24.00 based on a sum-of-the-parts (SOTP) valuation methodology.
