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For Rojana, analyst sees two-quarter dip

Rojana Industrial Park Plc could see at least an 80% plunge in revenue over the next two quarters because of flooding, says an industry analyst.

The SET-listed company has begun work to restore its heavily inundated industrial estate in Ayutthaya, where it plans to build a permanent dyke and four-metre floodwall in order to restore investor confidence.

Rojana was the first industrial estate of five in Ayutthaya to be submerged. The government on Monday started pumping water out of the estate and it could take a month before infrastructure is restored and some factories refurbished.

“This process should take around three and a half months to return operations to normal,” said Therdsak Taweetheratham, a research manager at Asia Plus Securities.

But he noted that small power producers at the estate with capacity of up to 265 megawatts may require longer to recover as some parts need to be fixed abroad. Water supply, waste water treatment systems and fuel stations that have been minimally affected can be fixed within three months.

Mr Therdsak said that Rojana was expected to report a loss in the next two quarters, because revenue from electricity and water utilities make up 65% of its total income. Revenue from land sales, 16% of the total, is also expected to disappear.

“Rojana’s operations are expected to improve by mid-2012. But the company’s debt will rise due to new investment of 1-2 billion baht,” he said.

Damages are estimated at 74.6 billion baht at Rojana. Its factories include producers of electronic goods, automobile parts and food, which has led to supply chain problems nationwide.

Rojana is spending 50 million baht to hire three contractors _ Italian-Thai Development, Nawarat Patanakarn and Christiani & Nielsen Thailand _ to pump 14 million cubic metres of water out of the estate. The contractors expect to be finished by the middle of next month with a plan to pump out 476,000 cubic metres per day.

Kachornsak Mahawannakun, an adviser to Rojana Industrial Park, said that at the second phase of the park, 80 pumps would start working in the next two to three days, as the water level has declined to the point that 50-60% of the earthen dykes can be seen.

It is expected that the entire park will be clear of water by Dec 16.

“We have to make it by Dec 16; otherwise it would be too late, we cannot wait longer,” said Prime Minister Yingluck Shinawatra, who visited the site yesterday.

Work at the first phase of the park, which has 115 pumps, cannot begin yet as the water level is still 10 centimetres above the dyke.

Ms Yingluck said the water needed to be drained out as soon as possible so that the industrial sector can revive and employment can resume.

She said the water would be drained out to canals and would not affect nearby communities.

“The draining will be finished on Dec 16, but the time for each factory to be able to operate is not the same because some places have heavy machinery,” she said.

Industry Minister Wannarat Channukul, meanwhile, said although the water level had risen in Bang Chan Industrial Estate, 16 pumps were in place and the number would increase to 40. “We are still battling the floodwater at Bang Chan. There are some areas where we found water seeping through the earthen dyke and we are trying to pump it out.”

Witoon Simachokedee, the ministry’s permanent secretary, said that despite some leaks, the water level in Lat Krabang Industrial Estate was on average one metre below the earthen dyke. Another 20 water pumps will be added.

The government plans to provide loans totalling 325 billion baht to flood-affected companies, in addition to an eight-year corporate tax exemption by the Board of Investment.

The government is also offering a tax deduction for imported machinery and raw materials for flood recovery, as well as pledging 100 billion baht on a water management system for its flood protection scheme.

Source: Bangkok Post

ThaiVest Editorial Team

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