A joint-venture (JV) between Penta-Ocean and Koh Brothers Eco Engineeringwon a $999 million contract for underground tunnels housing automated people-mover systems, while a China Communications Construction Company and Obayashi JV was awarded a $3.8 billion substructure package for the terminal and ground transport centre.
Civil engineering company, Hwa Seng Builder, also secured a $950 million airside infrastructure package for remote stands, taxilanes and support facilities.
“The continuous investment in large-scale projects like the T5 expansion, Tuas Mega Port and Marina Bay Sands integrated resort expansion provides a steady stream of high value projects that Singapore companies can bid for or participate in via JVs,” writes Mo.
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Furthermore, she points to falling material and labour costs easing margin pressures, thereby improving the profitability outlook for contractors.
The prices for several key construction materials, such as steel rebar, copper, stainless steel, steel flat, cement and diesel, Mo notes, will fall between 1% and 13% y-o-y in 2Q2025, driven by oversupply and competitive exports.
She adds: “Labour inflation also eased to 1.5% in 2024 from 9% in 2023. These reductions in input costs can improve profit margins for most construction companies.”
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With this, Mo’s top picks in the sector are Hong Leong Asia(HLA) and Tiong Woon CorporationHoldings (TWC).
The analyst adds that while BRC Asia(BRC) is also a key beneficiary of the construction upcycle, she has a “hold” call on the stock, due to falling steel prices which she expects to pressure margins.
Shares in Hong Leong Asia, Tiong Woon Coporation Holdings and BRC Asia are trading at $1.34, 60 cents and $3.08 respectively as at 11.01 am.
