CGS International Securities (Thailand) (CGSI) maintains its ‘Add’ rating on Stecon Group Public Company Limited (SET: STECON), with a target price of THB 8.50 per share, mentioning both positive and uncertain developments in the company’s second-quarter outlook.
For the upcoming 2Q25 results, CGSI highlights a wide range of expectations due to uncertainty over when losses related to the Pink and Yellow line mass transit projects will be recognized in STECON’s accounts. Management recently indicated discussions with auditors are ongoing, leaving the timing of these losses unresolved.
Another key factor for Q2 will be the potential gain from insurance claims, following the Bung-non-bon provision recorded at THB 1 billion in 4Q24. However, the exact amount STECON may recover this quarter remains unclear.
CGSI’s current forecasts exclude such insurance proceeds and instead factor in potential losses from the Pink and Yellow lines. The analyst expects STECON to record approximately THB 150 million in share of losses from associates in 2Q25, compared to losses of THB 136 million in 1Q25 and THB 166 million a year earlier.
The company’s core net profit for the second quarter is projected at THB 119 million, representing a surge of 372% year-on-year but a significant 65% drop from the previous quarter.
Looking ahead, attention will turn to two upcoming infrastructure projects: the M5 and M9 motorways, set to go to tender in 2026. CGSI anticipates STECON will secure the M9 project, while the M5 motorway is expected to go to CK (CH. Karnchang), given CK’s high net gearing of 175% as of 1Q25, which may limit its ability to compete for multiple large-scale projects.
Despite a 16% year-to-date decline in STECON’s share price, underperforming the SET Index’s 11% drop, CGSI reiterates its positive view. The THB 8.50 target price remains based on a valuation of 0.68 times projected 2026 price-to-book, 1.25 standard deviations below the 10-year historical average.
