For this current FY2025, Chong estimates that Soilbuild can grow its revenue and earnings by 20% and 28% y-o-y, thanks to progress payments.
The most notable contract won by Soilbuild was a $647.5 million deal to help build PSA Tuas Port.
According to Chong, this contract is one-off in nature as Soilbuild doesn’t usually tender for contracts of this size.
Nonetheless, "we believe Soilbuild can continue to secure tenders involving similar warehousing facilities in Singapore," the analyst adds.
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According to Chong, Soilbuild has an edge in securing tenders because of its Building Information Modelling (BIM) capabilities and environmentally sustainable practices.
"We expect future tenders to come from the private sector, especially low-carbon and/or high-specification industrial buildings such as those with high floor-to-ceiling heights," he says.
In addition to construction contracts, Soilbuild is in the business of operating a pre-fabrication hub too - one of the only five so-called integrated construction and prefabrication hubs operating today.
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According to Chong, due to the ramp in HDB BTO flats, Soilbuild’s precast and prefabrication segment turned profitable in FY2024, recording $12.3 million in operating profits, up from an operating loss of $0.7 million in FY2023.
"We expect the continuous ramp in HDB BTO projects to drive FY2025 operating profits of the precast and prefabrication segment by around 22%," he says.
Chong points out that the overall construction industry remains vibrant, with construction demand forecasted by BCA from 2026 to 2029 to be at $42.5 billion at midpoint, 23% higher than the previous 4-year forecast of $34.5 billion midpoint.
Besides Changi Airport Terminal 5, other key projects include Marina Bay Sands Integrated Resorts expansion, high-specification industrial buildings, MRT lines’ expansion and HDB BTO’s build.
Chong's "accumulate" call and 97 cents target price is based on 3.5x FY2026 earnings estimate, a valuation level which is below the company's historical 5.9x earnings between FY2022 to FY2024.
Soilbuild shares changed hands at 83 cents as at 4.22 pm on April 14.
