Kasikorn Securities Downgrades Con-Service Sector to Neutral over Delayed Project Launches

The Construction Service sector in the Thai stock market has been underperforming the market, especially right before and after the general election in May that saw the sector plunge sharply due to rising concerns of the delay in the forming of a new government to potentially prolong future construction projects.

The sector was nearly -20% in the past six months, compared to SET Index’s -3.64% and the main industry Property and Construction with -6.59%.


Kasikorn Securities (KS) has negative outlook for SEAFCO Public Company Limited (SET: SEAFCO) and Pylon Public Company Limited (SET: PYLON), two securities listed in the Construction Service sector, but only downgraded its investment view from Positive to Neutral.

KS wrote in a research, stating that it had a negative view of SEAFCO and PYLON. First, a large part of both backlogs will be completed within this year. Second, PYLON’s high speed railway project worth THB400 million will certainly be delayed. Third, the delay of the new government formation will limit the launch of new mega infrastructure projects. Fourth, the current political uncertainty is likely to delay the private sector from aggressively expanding their projects. Fifth, both piling operators have quite high fixed-cost structures related to their piling equipment and skilled labor.


KS reiterated its Neutral call on SEAFCO, believing that its decent earnings momentum in the following quarters should offset the drying up of its backlog. However, KS cut its mid-2024 PER based target price by 15.7% from THB3.81 to THB3.21, still pegged to 0.5SD below its historical mean.

As for PYLON, KS cut its mid-2024 PER-based target price by 27.3% from THB4.97 to THB3.92, still pegged to 0.5SD below its historical mean, and also downgraded from Outperform to Neutral.


KS noted that it revised up 2023 and 2025 core profit estimates for SEAFCO by 34% and 8.3% to reflect its high profit margin backlog in 2023 and improving political stability in 2024. However, the brokerage company revised down its 2024 core profit forecast by 26% to reflect a possible delay in new construction project launches. For PYLON, KS revised down its 2023 and 2024 core profit projections by 33% and 35% due to delays to both the high speed railway project and new construction launches. Meanwhile, KS raised its estimate for PYLON’s 2025 core profit by 7% on expectations of improving political stability in 2024.