PLE clients slow to pay but overall outlook picking up

       Power Line Engineering Plc (PLE), a SET-listed mechanical and electrical contractor, expects to weather current liquidity problems as it sees brighter prospects from government megaprojects.
       The company also hopes to obtain more private-sector contracts as the economy improves, chairman Swake Srisuchart said yesterday.
       Liquidity is tight because some struggling clients have delayed payments, but he said PLE still had good credit.PLE forecasts a decline in consolidated revenue of about 10% this year, to 7.9 billion baht from 9.11 billion last year.
       "Every construction company is facing the same scenario where projects are either delayed or downsized. One problem is inability to receive payment from troubled customers," he said.
       "Our gross profit should also drop this year as a result of price-cutting competition and the higher prices of construction materials we have in stock."
       Consolidated revenue fell 7% in the second quarter to 3.86 billion as project owners delayed work, and on reduced contract values for the Baan Ua-Arthorn low-cost housing programme by the National Housing Authority (NHA).
       The company's gross profit margin narrowed from 12.9% last year to 6.5% in the second quarter this year on higher raw material costs. It recorded a net loss of 654 million baht, compared to a profit of 138 million in the same period last year, as a result of provisions of 566 million baht for doubtful debts.
       The company currently has total provisions of 1.04 billion baht and hopes to see at least 500 million baht worth of writebacks by the end of this year. "Some [debtors] have potential to pay within this year," Mr Swake said.
       One of the debtors is Bo Bae Plaza, the wholesale clothing centre, with the 265-million-baht contract value set as a provision. PLE hopes to write back the sum as revenue soon as it has settled a dispute with vendors.
       Also, PLE is negotiating with local and foreign institutional investors seeking to acquire stakes in the company. "The venture would give us a few million baht, but what we hope for is the institutions' connections to support us in wining future projects," said Mr Swake.
       PLE currently has a backlog of 7.6 billion baht from 30 projects. They include the NHA and Tesco Lotus.
       It is waiting for contracts to be signed on four projects worth 4.6 billion baht, including the Purple Line rail system and the Chiang Mai International Convention Centre.
       PLE shares closed yesterday on the SET at 1.52 baht, unchanged, in trade worth 9.24 million baht.