This brought cheers to construction players, which was reflected in their share price gains over the past year, with the likes of OKP Holdings (SGX:5CF
) , Lum Chang Holdings (SGX:L19) , Koh Brothers Group (SGX:K75) and Soilbuild Construction (SGX:ZQM) seeing their share prices rise by at least 100%.
However, one player in the market has not yet benefited from this share price run-up. With a share price gain of just 16% for the past year, Hock Lian Seng (SGX:J2T) could play the catch-up game in 2026.
Established in 1969, Hock Lian Seng has undertaken and completed a wide range of civil engineering projects for both the public and private sectors in Singapore. Its business segment comprises civil engineering, property development and investment properties.
Meanwhile, one reason for the share price underperformance was the weak 1HFY2025 financial performance ended June 30, 2025.
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Even as revenue was up by 3.5% y-o-y to $103.3 million, net profit was down by 57.9% y-o-y to just $8.6 million. The significant decline in the bottom line was due to the higher cost of sales.
Looking beyond financial performance, the strength and value of Hock Lian Seng lie in its cash-flushed, borrowing-free balance sheet, with around 66% of the company’s current market capitalisation ($230 million) backed by cash ($152 million).
This excludes nearly $22 million in investment securities, which comprise equities and treasury bills, and development properties worth $43.7 million.
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At the same time, Hock Lian Seng’s share price is trading below its net asset value of 55.5 cents per share, at 45 cents, suggesting potential upside amid the current infrastructure upcycle.
As at June 30 2025, the company’s order book stands at approximately $335 million, which includes mainly the Aviation Park Station project and the Serangoon North Station project.
If Hock Lian Seng were to replenish its book order in this current environment, it could generate higher margins, as construction companies will now factor in higher material and manpower costs during the bidding process, translating into better margins ahead.
Flipping through its recent FY2024 annual report, the founding Chua family collectively holds close to 60% stake in the company and approximately 36.7% of the shares are in the hands of the public.
Coupled with low trading liquidity, perhaps a privatisation is on the horizon for Hock Lian Seng? Or will the market ultimately re-rate Hock Lian Seng’s valuation to a higher level, comparable to its construction peers?
No matter the outcome, the construction sector is booming, with multiple tailwinds ahead. Given Hock Lian Seng’s business operations and undervalued characteristics, it could potentially be one of the counters to see a good run towards the finishing line in 2026.
