The construction sector in Singapore took a hard hit from the COVID-19 pandemic. Supply chains was disrupted and there was the circuit breaker where all construction works had to be halted.
This led to projects being delayed. That being said, the industry is now showing strong recovery due to pent up demand for projects and many delayed projects had been speeded up.
In fact, the Building and Construction Authority (BCA) projects the total construction demand, i.e. the value of construction contracts to be awarded, to range between S$32 billion and S$38 billion in nominal terms in 2024.
The public sector is expected to drive total construction demand in 2024, reaching between S$18 billion and S$21 billion, mainly from public housing and infrastructure projects.
Some of the major upcoming public sector projects scheduled to be awarded in 2024 include the Housing and Development Board’s (HDB) new Built-To-Order (BTO) developments, additional Cross Island MRT Line contracts (Phase 2), infrastructure works for the future Changi Airport Terminal 5 (T5) and Tuas Port developments and other major road enhancement and drainage improvement works.
Private sector construction demand is projected to be between S$14 billion and S$17 billion in 2024. BCA anticipates that private sector construction demand in 2024 will come mainly from residential developments under the Government Land Sales, expansion of the two Integrated Resorts, redevelopment of commercial premises, as well as development of mixed-used properties and industrial facilities.
In this article, we highlight 3 construction stocks to ride on Singapore’s infrastructure boom.
Hock Lian Seng Holdings
Hock Lian Seng (HLS) was founded in 1969 and listed on SGX in 2009. HLS main business includes Civil Engineering Construction, Building Construction and Property Development and Investment.
HLS has undertaken and completed a wide range of civil engineering projects for both the public and private sectors in Singapore. The Group carries out civil engineering works for bridges, expressways, tunnels, Mass Rapid Transit (“MRT”), port facilities, water and sewage facilities and other infrastructure works.
Its past projects include: Changi Airport Terminal 3 Project, Sungei Serangoon Bridge Project, Jurong River Bridge Project, Telok Blangah Expressway Project, Kim Chuan Depot Project and many more.
The Group’s major customers include government and government-related bodies of Singapore, such as the Land Transport Authority of Singapore, the Housing & Development Board (“HDB”), PSA Singapore Terminals and the Civil Aviation Authority of Singapore.
In its latest half year results ended 30 June 2024, revenue dipped by 6% to S$99.8 million while net profit was up 128.8% to S$20.4 million. No interim dividend was declared. Its balance sheet is very healthy with no borrowings.
The company current order book remains healthy and stands at approximately $624 million as at 30 June 2024 which include mainly the Aviation park station project and Serangoon North Station project. The joint venture CAG project is expected to be completed by 3rd quarter 2024.
The Group’s industrial building project, Shine@TuasSouth, has sold 50% and leased 46% of the total units to date. The interest for industrial building units has picked up since early 2023.
HLS share price is up more than 29% year to date and is poised to ride on Singapore’s Infrastructure boom. You can view the company website here.
BRC Asia
BRC Asia main business is the designing, manufacturing and marketing of steel mesh which is sold under the “BRC” brand name. Currently, the Group has operations in Singapore, Hong Kong and Shanghai.
The Company was one of the first companies to pioneer the use of prefabricated steel mesh in the local construction industry and was granted pioneer status by the Singapore government in 1963. It has since denominated the wire mesh market with a 45 percent market share in Singapore.
In its latest business update ended 30 June 2024, revenue for 3Q2024 was S$381.6 million while net profit was S$34.1 million. The company has a net debt S$66.8 million which is still manageable. No 3Q2024 dividend was declared.
BRC Asia’s sales order book continued to remain robust, standing at S$1.32 billion as at 30 June 2024. The duration of projects in our sales order book range up to 5 years.
Going forward, we continue to expect a steady pipeline of projects to be launched and awarded, particularly from the public sector. Hence, with its strong order book, BRC Asia, could be one of the 3 construction stocks to ride on Singapore’s Infrastructure boom.
In fact, its share price is up 32.78% year to date and could poise to rise further. You can view the company website here.
Tiong Woon Corporation
Tiong Woon is a leading one-stop integrated heavy lift specialist and service provider, supporting mainly the oil and gas, petrochemical, infrastructure and construction sectors, with proven track record of more than 45 years.
The company also supply various models of tower cranes available for sale and rent. Due to the strong presence in the market, the Group is proud to be trusted as the authorised dealer for Zoomlion Tower Crane to market their products locally and internationally.
Tiong Woon is now one of the largest crane owners in Southeast Asia and is constantly upgraded and renewed through its fleet management program to maintain high standards in serving the needs of its clients and ensuring workplace safety.
For the full year ended 30 June 2024, Tiong Woon reported revenue up by 5% to S$143.1 million. Profit before tax increased by 14% to S$23.2 million. The company has a record strong cash position of $81.1 million.
The company declared a final dividend of 1.5 cents per share which is a 50% increase over the previous year. The Group maintains its positive outlook, as customer demand for Heavy Lift and Haulage solutions is expected to remain resilient in Singapore, particularly in the petrochemical and construction sectors, as well as in key regional markets such as India, Saudi Arabia, and Thailand.
Tiong Woon share price is up 13.04% year to date and could be 3 construction stocks to ride on Singapore’s infrastructure boom. You can view the company website here.
I have listed 3 construction stocks that you could add into your watchlist. Investors need to do their due diligence before investing in these 3 construction stocks.
