STECON Group Public Company Limited (SET: STECON) disclosed that Sino-Thai Engineering and Construction Public Company Limited (STEC), a subsidiary of the company, has signed construction contracts for the CHN-1A Data Center Project and the CHN-24 Data Center Project.
Both contracts were signed with Quartz Computing Co., Ltd., a subsidiary of Alphabet Inc. (Google’s parent company), on March 11, 2025, with details as follows:
1) CHN-1A Data Center is set to have CSA and MEP fitted out. The contract values at THB 7,575,113,346 (VAT included). The work will begin on April 1, 2025 to April 8, 2027.
2) CHN-2A Data Center is set to have CSA and MEP fitted out. The contract values at THB 8,376,164,306 (VAT included). The work will begin on April 1, 2025 to July 11, 2027.
The signing of these contracts highlight STECON as a firm capable of handling major infrastructure and digital system projects, which could significantly bolster the strength of the company’s portfolio.
Previously, the Board of Investment (BOI) has approved the promotion of two significant data center projects with a total investment value of THB 60 billion.
The projects involve Quartz Computing Co., Ltd., a subsidiary of Alphabet Inc. (USA), the parent company of Google, with an investment of THB 32.76 billion, and DigitalLand Services Co., Ltd., under the GDS group, with an investment of THB 28 billion.
The data center project by Quartz Computing aligns with Google’s business plan announced during a meeting with the Prime Minister on September 30, 2024.
Google plans to build new data centers and cloud regions in Thailand with an initial investment of $1 billion. This will be the fifth Data Center for Google in Asia, located in Chonburi, with a planned opening in 2027.
Meanwhile, the data center project by DigitalLand Services, a leading global data center provider with services in China and Southeast Asia, is set to open its new facility in Chonburi in 2026.
Both projects are expected to be hyperscale data centers with high computational capacity, capable of supporting the rapidly growing demand for cloud services from both consumers and businesses in ASEAN. Particularly in Thailand, where there is a high rate of online service usage and digital technology access.
Phillip Securities (Thailand) expects STECON’s normalized profit in 1Q25 to improve, after its gross profit margin (GPM) has return to normal level, and a special dividend from Gulf Energy Development Public Company Limited (SET: GULF) has bolstered its earning by THB 222 million.
STECON is set to adjust its Eastern Bangkok Monorail (EBM) and Northern Bangkok Monorail (NBM) accounting standard (which loses THB 600 million in profit share in 2024) to a long-term investment.
From 2025 onward, losses in the two monorail projects will not be recognized in the company’s statement, but the project will have to be reevaluated, as profit and loss from the reevaluation will affect STECON’s bottomline in 1Q25.
In 4Q24, the BEM carried 43,693 passengers per travel per day, and NBM carried 58,324 passengers per travel per day. Based on BTS, the breakeven is estimated to take around six additional years, and the concession is set for 30 years which ends in 2053.
STECON is currently reevaluating the projects, as such the securities will not take it into consideration, and instead use P/BV at 0.50x with base price at THB 5.80, and downgrade its recommendation to “Accumulative-Buy”.
In 2025, the government is set to expand public spending, which result in many government and private project came out this year, such as Motorway M5 and M9, Dark Red Skytrain Line, Prasert-Manukitch-Kanchanaphisek N2 Highway, Kathu-Patong Highway, AOT Airports, etc. These projects totaled more than THB 460 billion, and more than a year prior, which would help major contractors to diversify their incomes.
However, STECON’s director aims for THB 50 billion worth of signed contracts, expecting THB 32 billion revenue, highlighting the company’s growing ambition from the previous year. These ambitions stem from the company’s new projects from 2024 reinforcing its backlog, and 7.0% GPM returned to its normal level after evaluating the tunnels maintenance cost in the year. The securities company expects STECON’s normalized profit to grow 91% to THB 706 million.
