Italian-Thai Development Public Company Limited - Syntec Construction Public Company Limited

ITALIAN-THAI DEVELOPMENT PUBLIC COMPANY LIMITED                                                                                            SYNTEC CONSTRUCTION PUBLIC COMPANY LIMITED

1. Economic growth/decline

The economic is the one key to make decision and invest the construction business in Thailand. There are many ways to understand and forecast the economic that will growth or decline in the future. The one that can tell about the economic is Gross Domestic Product (GDP) in the country. In Thailand, GDP has increased slowly since 2015(Table1). That mean the economic grow up and they will be the opportunities to invest the business include construction business. Therefore, there are a lot of construction projects that have built in this period including private and public project.      

                Table1. GDP Thailand 2015-2017

2. Corporate performance

Both ITD and Syntec have the same operation performance for controlling activities in the companies. They are controlled by the   measuring system and Evaluate the performance of employees in the form of an index Key Performance Indicators (KPIs) and competency or potential of the person is a tool to control and define Guidelines for working in a systematic manner and with efficiency, protection and potential risks from the operations of various agencies, including also Determining the scope of power. Moreover, ITD and Syntec also have same problem to decrease the budget or input and increase the work with minimum cost. So, the companies have many measures. Aspects that will reduce the impact of wage increases, such as using new technology, machine tools to replace labor Arrange the management system for the workers to work more efficiently. Including control of construction costs.

3. Size of “for-profit corporation” and type of “for-profit corporation”

In term of size of ITD and Syntec are quite different.  ITD is the biggest construction company in Thailand and there are more 8 times of assets than Syntec (Table2). They have main income from government project and Thailand and other country but the weakness of doing construction with government is low profit because the government will choose the lowest price in bidding process, then when compare with Syntec that is private company. Syntec is medium construction company and there are only total assets equal 9930 billion baht in 2017 but the net profit of the company is equal 1008 billion baht that higher than ITD that get only 421 billion baht in 2017. This result show that the type of the company has one of the effects to the profit but the important thing to make high profit is management decision.

     Table2. Compare the financial Data between ITD and Syntec in 2017 and 2018 quarter3 (Million baht)

4. Management decision

Manager decision is the important factor to make the company successful. Both of ITD and Syntec have the good manager and operation for improve the company but the result of the companies is different. ITD is the big company but the manager fails to manage the project so, the profit will be low. The cause is not only the type of the company but also the management because the result of profit from another company that do project with government like CH. KARNCHANG company, but there has profit equal 1810 billion baht that is more than ITD (Table3). So that mean this company has better management decision than ITD. Moreover, the net profit of CH KARNCHANG increases 17.5% from 1810.01 to 2126.61 Million baht in 1 year but the net profit of ITD 51% decrease from 412.65 to 201.30 Million baht. On the other hand, Syntec is successful in make the profit that mean they has good manager in the company. Although, they have the asset lower than ITD but still get profit more than ITD.  

Table3. Compare 3 companies in term of type of construction

5. Competition

Frist, ITD and Syntec have different competition. ITD work with government that is quiet low competition because there are not a few construction companies that do government project. Moreover, ITD always do the major and complex project such as sky train, dam or power plant in Thailand and other country in ASEAN. That mean, this company has high experience about that project and the government trust this company as the one of the biggest companies in Thailand. In contrast, Syntec is different, they have high competition in building project with many companies but the advantage of high competition is improving very fast. They need to improve the company to fight with another company in term of technology, management or operation because if the companies in high completion is slow or not good in management, they cannot get the project for sure.

Financial Factors in Construction Company

1. Capital availability

This value is ratio between cash and total current assets in the company. That can see in the financial statement and this value is the ratio that can use to compare the company about financial liquidity and amount of cash that company have in ratio.

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                                 Table 4. Compare capital availability ratio between Syntec and ITD

From table 4 show that the value ratio in Syntec is higher than ITD that mean Syntec has capabilities of cash that can use in term of investment, pay for liabilities or do something about business better than ITD.

2. Credit Arrangement and Debt ratio

Debt equity ratio can tell that this company is safe or not safe in term of capabilities to pay debt in long term. Moreover, this value is indicator to make credit or trust from another companies and investor.

Table 5. Compare debt equity ratio between Syntec and ITD

In table 5, the value of debt equity of Syntec is lower than zero that mean the they have abilities to pay debt more than ITD and Syntec is in the safe condition also.

Moreover, the value of return on asset and return on equity can tell about capabilities to make profit in each company(positive) and that mean if there are high ROA or ROE, they will have money that come from profit. They also have credit more than another company because they have money to pay, if they have debt. Return on assets is a profitability ratio that provides how much profit a company is able to generate from its assets and return on equity is  a measure of the profitability of a business in relation to the equity.

3. Fund Allocation

Fund allocation is an investment strategy that aims to balance risk and separate the risk to any investment such as: equity, bond, property or alternative investment and cash. In these 4 charts show about the asset allocation in each detail (Chart 1).