BUILDING & ENGINEERING | Staff Reporter, Singapore

Construction bosses bullish on higher orders in 2018

Some of them eye projects like Changi T5 and the KL-Singapore High-Speed Rail.

CIMB Research, after a holding conference with eight construction firms, said most bosses are optimistic on their outlook for 2018, as they expect higher construction demand from a slew of en bloc projects to be relaunched and major infrastructure projects.

CIMB analyst Colin Tan said, “The construction companies are generally positive on taking on more construction projects in 2018, in view of the slew of en-bloc projects that could be relaunched soon and upcoming mega infrastructure projects, including North-South Corridor, Changi Airport Terminal 5 and KL-Singapore High-Speed Rail (HSR).”

According to analyst Lim Siew Khee, Yongnam Holdings is optimistic on winning orders from NSC and Melbourne Metro and is eyeing potential contracts from KL-Singapore High-Speed Rail (HSR) and Changi Airport Terminal 5 (T5). “Management is confident of clinching contracts for strut works on various stretches of the North-South Corridor (NSC) this year, which could help Yongnam regain its A1 grading for civil engineering from the Building Construction Authority. Apart from NSC, Yongnam also plans to tender for contracts from the HSR and Changi T5,” he added.

Meanwhile, CSC Holdings’ management is optimistic about demand prospects this year, partially due to the slew of en-bloc projects that are expected to launch soon. “CSC believes that more contracts requiring foundation and geotechnical engineering works will come its way this year and that the quality of its orderbook is improving,” Tan said.

About 80-85% of Ley Choon Group’s revenue came from underground utilities works, of which 65% is related to water piping contracts from the Public Utilities Board. Moreover, “the company stated it continues to focus on improving efficiencies and reducing overheads as part of ongoing debt restructuring agreement undertaken in 2016,” Tan noted.

Soilbuild Construction Group, meanwhile, is counting on its subsidiary Soil-Build, which has an A1 grade from the Building and Construction Authority, allowing it to tender for public sector projects of unlimited value. Analyst William Tng noted that its order book as at 31 December 2017 was $451.9m. “Soilbuild stated it sees stiff competition in Singapore but healthy demand in Myanmar,” he added.

Tng noted that TA Corp’s construction business accounted for 68% of revenue in 2017, whilst its three other business segments accounted for the remaining 32%. “TA Corp also has a fast-growing distribution business in Myanmar.Its 51%-owned Que Holdings (unlisted) is the exclusive distributor of the ‘Continental’ brand of passenger & light truck tyres in Myanmar, as well as the sole distributor of ‘Shell’ lubricants,” he added.

Another positive firm is Tiong Seng Holdings, whose debts undertaken for The Equinox in China have already been paid off with the sales proceeds collected. Tan added, “It is re-focusing away from the China property development business and back to the Singapore property market. Its 2017 net profit doubled to $30.9m as a result of the higher profitability of its construction segment.”

The Building and Construction Authority (BCA) projected the value of construction contracts awarded this year to rise to between $26b to $31b, as several companies are optimistic on replenishing their order books in 2H2018. Meanwhile, it’s still a rocky ride for the whole sector due to muted construction activities in the coming months.

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