The Building and Construction Authority (BCA) said total construction demand for 2025, or the value of construction contracts to be awarded during the year, is likely to range between $47 billion and $53 billion in nominal terms.
This year’s estimate, released on Jan 23, is 46.88% higher or 39.47% higher than 2024’s range of $32 billion and $38 billion in nominal terms.
Normalised to real values, the demand in 2025 is estimated to range between $35 billion and $39 billion, which is between 0.3% to 11.7% higher than pre-Covid levels in 2019. There were no equivalent estimates released in 2024.
According to the BCA, the strong demand is due to the expected contract awards for large-scale developments such as Changi Airport Terminal 5, the expansion of Marina Bay Sands, as well as other public housing and upgrading works. Other contracts include works for the Thomson-East Coast Line Extension (TEL) and Cross Island Line (CRL), as well as for the Woodlands Checkpoint extension and the Tuas Port.
In comparison, last year’s total construction demand was mainly attributed to demand from the public sector from new Built-To-Order (BTO) developments, the second phase of the Cross Island MRT Line, infrastructure works for Terminal 5 (T5) and Tuas Port developments, to name a few.
Construction plays
See also: The costs and opportunities behind a changing skyline
Following the news, shares in most Singapore-listed construction plays including Ley Choon, Hong Leong Asia , Pan United, and OKP closed higher on Jan 23. While this is not a comprehensive list of all the stocks, here are some to look out for.
Ley Choon, a one-stop service provider for underground utility infrastructure, construction and road works, saw its shares increase by 0.8 cents or 16.67% to close at 5.6 cents on Jan 23. The company was the second-highest traded counter on the SGX with some 25.02 million shares changed hands at market close. On Jan 15, Ley Choon announced that it won contracts worth some $131.5 million in total for the supply and installation of underground utilities services and road reinstatement works. For the 1HFY2025 ended Sept 30, 2024, Ley Choon’s earnings rose by 35.9% y-o-y to $7.3 million.
At the same time, shares in Hong Leong Asia, which is seen as a proxy to the construction upcycle in Singapore and Malaysia, rose by 1.5 cents or 1.6% up to 95.5 cents. Hong Leong Asia reported earnings of $49.5 million for the 1HFY2024 ended June 30, 2024, 60.9% higher y-o-y.
See also: CSE Global reports lower ending order book for FY2024 of $672.6 mil, down 7.9% y-o-y
Steel supplier BRC Asia , a 20%-associated company of Hong Leong Asia, saw its shares close at $2.75, 3 cents higher or 1.1% up. For the FY2024 ended Sept 30, 2024, BRC Asia reported a record net profit of $93.5 million, 23% higher y-o-y, on the back of a one-off gain of $16.5 million from the disposal of an associate. That said, in its release dated Nov 21, 2024, the company noted that it saw a “steady stream of domestic projects being launched for tender”. In FY2024, BRC Asia’s gross profit rose by 11% y-o-y to $153.8 million.
Meanwhile, Hock Lian Seng’s shares rose by 2 cents or 5.48% up at 38.5 cents. The civil engineering company reported earnings of $20.4 million for the 1HFY2024 ended June 30, 2024, 128.7% up y-o-y. Gross profit surged due to growth from both segments.
Shares in infrastructure and civil engineering group, OKP, also rose by 0.5 cents or 1.54% to close at 33 cents. For the 1HFY2024, OKP reported a gross profit margin of 28.2%, up from 2.9% in the corresponding period the year before, as well as a record high order book of $706.9 million. That said, this was not enough to offset the decrease from the maintenance segment and rental income, which led to a 66.6% y-o-y drop in earnings of $11.9 million.
Shares in construction materials supplier Pan-United closed 1.5 cents higher or 2.5% up at 61.5 cents. In a Jan 13 report, CGS International analyst Kenneth Tan noted that the company is likely to benefit from an industry upcycle in FY2025. “Based on January to November 2024 figures, we believe full-year construction output and contract awards exceeded the upper end of BCA’s guidance by around 3% and around 13%, respectively,” he wrote at the time. For the 1HFY2024 ended June 30, 2024, Pan-United saw earnings increase by 34% y-o-y to $18.6 million.
Soilbuild Construction also saw its shares increase by 0.5 cents or 0.64% to 79 cents on Jan 23. Since August 2024, the company was awarded a total of six contracts worth $306.4 million, bringing its total order book to $1.32 billion. The company was awarded two contracts worth $69.6 million in August 2024; another two contracts worth $85.5 million in November 2024; and two more contracts worth $151.3 million collectively, in January. For the 1HFY2024, Soilbuild’s earnings surged by 444.5% y-o-y or nearly seven times to $7.4 million from $1.4 million in the same period the year before.
Finally, shares in integrated services specialist and provider Tiong Woon closed 1.5 cents or 2.42% higher at 63.5 cents. For the FY2024 ended June 30, 2024, earnings increased by 16% y-o-y to $18.2 million; revenue rose by 5% y-o-y to $143.1 million mainly from higher contributions from the heavy lift and haulage segment.
