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Riding On The Construction Boom In Singapore

construction crane Building and Authority Construction (BCA) announced in early 2013 that it sees a “strong construction demand of between $26-32 billion is projected for 2013, anchored by public sector projects.” The construction boom is expected to continue into 2014 and 2015 as the average construction demand is projected to be $20-28 billion per annum. With the population set to increase in the coming years, there is a strong pipeline of construction projects to cope with demand.

Let’s look at three varied companies in the construction sector that may benefit from the surge in construction projects.

Cement and Ready Mixed Concrete

The first company is Pan-United Corporation Limited (SGX: P52). Pan-United has cemented itself as a leading supplier of cement and ready mixed concrete with a 29% and 33% market share respectively. This makes the company the largest supplier of cements in Singapore.

Pan United has been involved in various projects in Singapore such as the construction of Mass Rapid Transit (MRT) Circle Line, Downtown Line and Tuas West extension, Kallang-Paya Lebar Expressway, Marina Coastal Expressway, Gardens by the Bay and public housing, among others.

The company carries a PE of 11.7 and the dividend yield is 4.4%.

Cranes

Cranes are omnipresent in land-scarce Singapore due to ongoing construction almost all the time. One company that supplies a lot of these cranes is Tat Hong Holdings Limited (SGX: T03). Tat Hong is the largest crane company in the Asia Pacific region with a fleet of more than 1,500 crawler, mobile and tower cranes. It deals with crane rental, tower crane rental, distribution, and general equipment distribution. The company not only serves the construction sector in Singapore, but also the infrastructure, oil and gas, mining, resources, engineering sectors across Southeast Asia, Australia and China.

Tat Hong is currently involved in the construction of MRT Downtown Line Stages 2 and 3 and the chemical plants on Jurong Island.

Tat Hong is trading at a PE of 10.6 and its dividend yield stands at 3.4%.

Steel Structures

The last company to be featured is Yongnam Holdings Limited (SGX: Y02). This company is involved in the design, fabrication, supply and erection of steel structural frames for long span aircraft hangars, high rise buildings, commercial and industrial buildings, as well as infrastructure related projects.

The company was involved in many of the large-scale commercial, industrial and public projects such as construction of MRT lines, stadiums and office buildings. Currently, Yongnam is busy with the new Sports Hub project in Kallang, among others.

Yongnam is currently trading at a PE at 10.2 and the dividend yield is at 2.9%.

Into the Future

Some of the future developments in Singapore include the construction of Changi Airport Terminal Four, Jurong Region Line, Cross Island Line, Circle Line Stage 6, Downtown Line Extension, North East Line Extension and the rail line linking Singapore to Malaysia. These huge construction projects may bode well for the companies featured here.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.  Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.