SCI Electric Plc was listed on the Stock Exchange of Thailand in October last year. CEO Kriangkrai Pheanvitayaskul discusses the company's strategy and outlook.
Please explain SCI's history.
SCI started 50 years ago, focused on electrical power systems. Over the years as Thailand developed, specifically with the industrial estates and development zones such as Map Ta Phut, we were able to expand further into switchboards and cable trays.
As the market in Thailand grew further we acquired technology from both Japan and Australia to include galvanised products and added towers for telecommunication and steel structures. In 2016, we expanded internationally, first to Laos, the "Battery of Asia", where we invested in a 3.2-megawatt hydropower plant that has been commissioned since 2013 and developed a strong reputation as an engineering, procurement and construction (EPC) contractor.
What is your business model today?
Today we have four core businesses starting with manufacturing, designing and installing electrical switchboards and distribution boards. We also manufacture cable trays and supporting systems for electrical switchboards. Secondly, through our subsidiary Ajikawa & SCI Metal Tech, we manufacture steel fabrication structures including power transmission and telecommunication towers, steel structures and substations as well as other galvanised steel fabrication. For these businesses, the main customers are contractors or project owners such as factories, Egat, the MEA, PEA and so on.
We have also expanded into EPC services for power transmission and distribution systems such as high-voltage transmission lines, power substations and distribution systems. We were awarded the main contract for the Power Distribution System and Rehabilitation Project Phase 1 (PDSR1) with a value of US$94 million in Laos in 2013, and recently received a $416-million contract from Electricite du Laos (EDL) to proceed with a 500/230-kilovolt transmission line and substation project.
Finally, we have a renewable energy and utilities business that includes the 3.2MW hydropower plant in Savannakhet province in Laos. As well, we recently began a joint venture with Property Perfect Plc to invest in several renewable energy and utilities businesses including power plants, solar rooftops and a tap water business.
What differentiates SCI from its competitors?
We have expanded regionally to both Laos and Myanmar. In Laos we have gained the reputation of providing quality EPC services along with the ability to invest into renewable energy projects. Recently we were awarded the $416-million project and we have the potential to win another project of a similar size for a 48-month period.
In Myanmar, we are investing, with a local partner, $16 million in a plant to manufacture power transmission and telecommunication towers. The facility will be located in the Thilawa special economic zone that is owned by major Japanese corporations (Marubeni, Sumitomo and Mitsubishi). With this demand from foreign investors as well as from the telecommunications industry which is just beginning to expand, we can use this venture to expand into other businesses in the future.
What are the biggest risks facing your business?
For Thailand the risks are well-known and in Laos and Myanmar the risks are different in terms of the stage of our business and of economic development in each country. The biggest hindrance that we have faced over the years is that Thailand does not have a policy to help its companies expand internationally. The governments of China, Japan, the US, Korea and so on actively assist their companies in expanding, and their banks are able to provide financing, but Thai companies typically have to use their own resources and this does limit our potential.
Where do you see SCI five years from now?
In the next few years for SCI, the majority of our business will come from our EPC segment because of the projects that we have recently won and our expectation of future projects. However, in parallel we will focus on increasing our recurring income from renewable energy and utility businesses over the next five years to ensure a sustainable stream of profits.
With our current presence in Thailand, Laos and Myanmar, we believe that our investments in neighbouring countries will drive our growth considerably and sustain our revenue in the long run.
The Executive Q&A Series is presented by ShareInvestor, Asia's leading financial internet media and technology company and the largest investor relations network in the region. The interview was conducted by Pon Van Compernolle. For more information, e-mail pon@rossvancompernolle.com or supat@shareinvestor.com. Website: www.ShareInvestorThailand.com