Stock focus :Italian-Thai Development
KGI Securities (Thailand) has maintained its "neutral" rating on Italian-Thai Development's stock with a 2007 target price of Bt7.10 per share.
As of October 16, ITD's backlog stood at Bt88.5 billion, down 1 per cent quarter on quarter. The biggest contracts signed recently were the BTS Sukhumvit Extension worth Bt3.6 billion and the North Bangkok Combined Cycle Power Plant worth Bt3.9 billion, while other contracts comprised many projects of small value. Projects with lowest bids or under negotiation showed a tiny figure of just Bt920 million, which is considered immaterial compared to the company's size and number one position in the construction sector. Given that there are no sizeable new projects being offered for bidding in the near future except the upcoming five-line mass transit bidding, the brokerage believes ITD's share price will largely be driven by how soon the new transit lines are put for bidding next year. Fundamental risks remain from the Baan Aua Arthorn housing projects, ITD Cementation in India and potash mining. The risk from the Baan Aua Arthorn projects, for which the budget was dramatically cut from 600,000 units to 60,000, has been increased. Since the projects contribute 39 per cent of ITD's total backlog, this sharp reduction should have an adverse effect on the company's prospects. There is uncertainty about the timeframe of the mining licence to be awarded for its potash business. The longer the delay, the higher the financing costs ITD has to bear.
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