“According to Soilbuild, its tender book remains strong at $1 billion for semiconductor plants, warehouses, Tuas Mega Port works, and industrial development via Soilbuild Holding’s (Unlisted) bid for Industrial Government Land Sales (IGLS),” Lim and Then write in their Jan 15 report.
Even though construction order wins tapered on a h-o-h basis in the second half of the year due to delayed capex plans by corporates, the analysts believe there were pockets of precast orders from HDB build-to-order (BTO) projects.
As such, they have maintained their order win targets at $530 million and $450 million for FY2025 and FY2026 respectively, with a variation potential of 5% to 10% for FY2025 wins as construction project awards were delayed.
The analysts also expects to see an uplift in Soilbuild’s margins with management expecting to complete the Tuas Mega Port’s supply-chain project, a “key contributor” to Soilbuild’s $1.2 billion order book as of 1H2025, by 1Q2027. The project is also estimated to achieve the first phase of its temporary occupation permit (TOP) in April 2027, earlier than its initial completion target by 3Q2027.
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In their view, an early completion of the project could result in upside to their gross profit margin (GPM) estimate of 16% in FY2027 and would free up the group’s capacity to take on more projects, especially from the Port of Singapore Authority (PSA).
Ahead of Soilbuild’s full-year results, the analysts foresee Soilbuild to end the year in a net cash position with a 116% y-o-y surge in FY2025’s earnings.
“Given its low capex commitments, we up our FY2025/FY2026 dividend payout percentage to 35% (from 20%; FY2024: 18%), or dividend per share (DPS) of 3.2 cents [implying a yield of 3.6%],” say Lim and Then. “This is backed by FY2025 ending cash balance of $60 million (higher than its historical 10-year average of $20 million).”
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The analysts have increased their target price to $1.20 from $1.05, pegged to an FY2027 P/E of 10 times, in line with the average P/Es of Singapore builders.
CGSI’s earnings and target price estimate has been adjusted from Soilbuild’s one-for-four stock split, effective Jan 12.
As at 11.59am, shares in Soilbuild are trading 3 cents higher or 3.41% up at 91 cents.
