Chu Kai lifts its way to growth in competitive construction industry

Chu Kai Plc (CRANE), which entered the Market for Alternative Investment in February 2008, intends to be the leading logistics service operator specialising in and transporting machinery and equipment in Southeast Asia. Chief financial officer Chamnan Ngampojanavong discusses the company’s strategy and outlook.

649008What is Chu Kai’s business model?
Our group of companies has been set up since 1990 to provide sales and rental service for cranes, forklifts and other construction machinery for lifting, assembling and installing large and heavy objects. We have four subsidiaries: The Crane Services Co, The Crane Laem Chabang Co, The Crane Rayong Co and The Crane Heavy Lift Co.

Chu Kai itself imports mainly used cranes and parts for sale and repair services, while the subsidiaries provide rental service.

We are also the sole distributor of Zoomlion, the top Chinese crane brand, which is 50% cheaper than German and Japanese products, while the quality is not very different.

How many different types of crane do you have?

We currently have four different types. Rough-terrain cranes are small units with maximum capacity of 70 tonnes and are not suitable for travelling long distances; thus they require other vehicles to transport them. Truck cranes range in size from small units to 200 tonnes, which are allowed to run on highways with a yellow plate, eliminating the need for special transport equipment.

Crawler cranes are the largest units with capacities from 70 to 1,250 tonnes and must be disassembled and moved by other vehicles such as trailers and trucks. Finally we have Liebherr and Zoomlion all-terrain cranes from 220-500 tonnes. Altogether we have more than 100 cranes. Last year we invested in two 600-tonne cranes and one 1,250-tonne unit, which alone cost 300 million baht.

Which industries are your customers and how is the utilisation rate?

Our customers for both sales and rental are mostly energy and petrochemical businesses, power plants and ports. A company from one of these industries — for example, PTT Plc would hire a contractor for a project, and we would act as a subcontractor by supplying cranes and other necessary machinery.

What makes Chu Kai different from its competitors?

We value the needs and expectations of our customers by ensuring our services are provided with a highly experienced team, that mechanics and related personnel are readily available whenever required. Our main advantage over our competitors is we have advanced up the value chain in the industry whereby the capacities of our cranes are higher than what is normally available in the market.

For example, our recently acquired 1,250-tonne unit is the biggest crawler crane in the market, and when we acquired a 600-tonne crane four years ago, it took our competitors three or four years to catch up. Also with Zoomlion, we are able to provide our customers with a great product at a considerable discount compared with other imported brands.

What are the biggest risks facing your business today?

Our business is capital-intensive, so we have to carefully manage what we invest in and balance our portfolio of cranes. We must continually ensure our assets are in good condition and that utilisation rates are maintained.

In order to maintain our utilisation rates, we must diversify our work and customers, which will have a positive impact on our margins. As for employees, we are lucky we can be a one-stop service for customers due to the quality of our team. We will continually invest in more staff to sustain our performance and expand our business.

What impact do you think the Asean Economic Community (AEC) will have on your business?

We have already begun taking the necessary steps to be a regional company. We’ve expanded to Laos by providing services there. There is also a tremendous amount of investment in Myanmar, and our customers are likely to win projects that will require more cranes from us. Eventually, there will be a positive impact for us, as our customer base is also expanding throughout the region and is most likely to continue to expand once the AEC begins.

Where do you expect to see Chu Kai five years from now?

We will continuously expand both our sales and rental segments. For rental service, we expect to accumulate more cranes with higher capacities and for sales — we will ensure a more steady process. We’ll ensure not only that our base in Thailand is strong with enough supplies for the domestic market but also expand our regional service and distribution centres to northeastern Thailand. Moreover, we will continue to expand into Laos and other neighbouring countries.

We are also studying the possibility of an auction business to boost Zoomlion’s sales and also supply smaller players in the Thai market.

Source: Bangkok Post

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