NGV Bus

The dismissal from the Administrative Court on order of the suspension of 489 NGV buses has revived Cho Thavee Public Company Limited (CHO) from its liquidity crisis, which occurred after the consortium (SCN-CHO) had won the auction of NGV buses, but the competitor filed a complaint to Bangkok Mass Transit Authority (BMTA), causing a halt on the buses’ consignment. The halt had severely caused CHO to fall into a slump as the first delivery, comprised of 100 buses, had been delivered, but not receiving even a dime. The lender that previously approved the loan also revoked the contract after the case was delivered to the Administrative Court. When the earning was lower than the expense, Mr. Suradech Taweesaengsakulthai, chairman of executive committee and president of CHO, had to do everything in order to survive, whether it be paying the deposit to Chinese partners for the buses expense and some other expenses to maintain the project until the ruling. For this reason, CHO had to borrow the money no matter how high the interest rates were, which added to CHO’s 2Q18 financial statement loss in profit of ฿2.856 million. Meanwhile, the current asset was at ฿2,456 million, the debt to equity (D/E) was 3x. On the other hand, CHO only had the cash flow of only ฿0.87 million! The wise man once said, "after a storm comes a calm." On November 7, 2018, the Administrative made a decision to reject the complaint, which allowed CHO to get back on its feet. Starting with the first payment for the already delivered 100 buses worth ฿300 million being proceeded to SCN-CHO consortium. Even though CHO still has not received the full amount of the due payment, it was considered a good start when the lender made a U-turn and approved CHO as a borrower again. However, CHO’s high financial cost will eat up its profit until the middle of next year. For CHO, this is like a ray of hope after seven months in the dark. All that remains are the follow up on the remaining 389 buses. The second lot of 100 NGV buses will be delivered on November 27, 2018, and will realize the income worth ฿300 million by the end of this year. The next delivery for 102 buses is due on December and the remaining of 187 buses for the last lot are due no later than March 2019. The remaining three deliveries will strengthen CHO’s revenue to see its high time again. Moreover, after the completion of all deliveries, CHO will also receive the maintenance income worth ฿30 million per month or ฿360 million a year for 10 years. This is where CHO can gain a huge profit, both from maintenance fees and 50% of the profit from the consortium. Up until now, CHO had been struggling in the mud, but now it is time to shine at the mountaintop!