Business Environment Issues A Risk To Financials


A public forum recently held in Thailand has highlighted several potential hurdles for the implementation of projects under the country 's long-term water management and flood prevention plan. We believe that these hurdles are pertinent and not only pose a major downside risk to the implementation of the water management and flood prevention plan, but also to Thailand's ambitious infrastructure plans.

The conference was organised by the Engineering Institute of Thailand and consisted of engineers and water experts from the public and private sectors. During the conference, some of the key potential hurdles raised were the ability of the government to complete land acquisition as well as environmental and health impact assessments in time to complete the water projects within five years. At present, companies are undergoing the final tendering stage for the projects ( see our online service, February 7 2013, Water Plans To Provide Earnings Diversity ').

At The Lower End
Asian Countries - Infrastructure BE Risk/Reward Ratings, Scores Out Of 100

We believe that these hurdles are pertinent and not only pose a major downside risk to the implementation of the water management and flood prevention plan, but also to Thailand's ambitious infrastructure plans ( see our online service, January 24 2013, 'Infrastructure Spending Risks Widening Budget Deficit '). The Thai public has often been very determined in preventing projects that are perceived by them to be detrimental to their well-being. Over the past few years, we have seen the construction of several power plants been delayed significantly due to strong opposition from local communities concerned about the environmental impact of having a gas-fired power plant at close proximity. These delays take place even when companies have received approval from the Thai government, resulting in significant losses for the construction companies involved in the projects ( see our online service, September 29 2010, 'Delays In IPPs Prompt New Public Investments').

Projects-Driven
Major Thailand Infrastructure Players - Stock Prices, THB

This begs the question of when these infrastructure projects could be implemented by their successful bidders. We believe that a fundamental reason for the recent run-up in the stock prices for major Thailand infrastructure companies are based on the assumption that these companies would enjoy a significant boost to their project portfolio. Should these projects be delayed, they could have a material impact on the financial performance of the companies involved. They could in turn have negative implications on their stock prices.

This article is tagged to:
Sector: Infrastructure
Geography: Thailand

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