Construction to outperform as public works anchor $30b–$40b demand: UOB

PUB puts the full DTSS programme at about $10b, whilst the Cross Island Line is seen above S$40b.

UOB Kay Hian expects the Singapore construction sector to outperform, supported by strong demand and multi-year orderbook visibility, and has maintained an overweight call on the sector.

The broker said the construction upcycle remains firmly intact, driven by a post-Covid catch-up in delayed projects alongside a new wave of infrastructure investment.

It cited Building and Construction Authority data showing annual construction demand averaging $30b to $40b in recent years, compared with below $30b during the pandemic.

Public-sector projects are expected to anchor demand, including the Deep Tunnel Sewerage System, coastal protection and flood-mitigation works, desalination and NEWater plants, and major transport developments such as new MRT lines and Changi Terminal 5.

UOB noted that PUB has indicated the full DTSS programme could cost around $10b, whilst the Cross Island Line is estimated to exceed S$40b.

UOB said sector valuations have re-rated since its previous note, with average 2025 price-to-earnings multiples rising from 9.5x to 13x and 2026 multiples from 8x to 10x.

It named Centurion, Reclaims Global, and Tiong Woon as its top picks, with target prices of S$1.90, $0.56, and $1.11, respectively.

The report also highlighted strong orderbook positions across the sector, including BRC Asia at $1.9b, Soilbuild Construction at $1.19b, and Koh Brothers Eco at $1.1b.

Within its coverage, UOB raised its target price on Soon Hock to $0.71 whilst maintaining a buy call, and upgraded Tiong Woon to buy on expectations of margin recovery from FY26.

Key risks flagged include labour shortages or tighter foreign worker quotas, project execution disruptions, and cost inflation.

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