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A Rally after the National Day Rally?

Singapore_flag On 18th August 2013, our Prime Minister, Mr Lee Hsien Loong, delivered his National Day Rally for this year. He cited plans to increase housing grants to middle-income families, expand health-care coverage and make education more open and broad. Towards the end of his speech, he also touched on the relocation of Paya Lebar Airbase to Changi, expansion of Changi Airport and redevelopment plans for a waterfront city in Tanjong Pagar, part of the Southern Corridor, after relocating the ports at Tanjong Pagar area to Tuas.

Let’s look at some of the companies that may be positively impacted by the proposed changes.

First off is an aircraft maintenance, repair, and overhaul (MRO) company, SIA Engineering Company Limited (SGX: S59), or SIAEC, that provides engineering services to airlines. With the expansion of Changi Airport to Terminal 4 by 2017 and to Terminal 5 in the next decade, MRO companies like SIAEC will benefit from the increased demand in air travel. Aircrafts have to be maintained to its optimal operating conditions in order for it to fly efficiently.

Together with the expansion of Changi Airport, the carpark currently fronting Terminal 1 will be converted into an iconic mixed-use complex codenamed “Project Jewel”. PM Lee dubbed it “Gardens at the Airport”. CapitaMalls Asia Limited (SGX: JS8) is the company that will jointly develop Project Jewel, together with Changi Airport Group.

The expansion of Changi Airport will see its total capacity rise to 85 million passengers by 2018. With increased capacity and new offerings, tourism into Singapore is set to rise. Hotel owners like CDL Hospitality Trust (SGX: J85) and Far East Hospitality Trust (SGX: Q5T) may benefit.

The relocation of Paya Lebar Airbase to Changi will release 800 hectares (ha) of land, an area larger than Bishan or Ang Mo Kio, and will allow new exciting developments to take place. The height restrictions of buildings in the vicinity of Paya Lebar Airbase will also be removed, paving way for en-bloc opportunities. New transport corridors like MRT lines, major roads and expressways, could be built through the freed-up space.

The movement of the ports from Tanjong Pagar to Tuas will free up 1000 ha of land, two and a half times the size of Marina Bay.

Companies such as Yongnam Holdings Limited (SGX: Y02), involved in the design, fabrication, supply and erection of steel structural frames for infrastructure-related projects, Pan-United Corporation Limited (SGX: P52), a major provider of basic building resources such as cement and ready-mixed concrete and Chip Eng Seng Corporation Limited (SGX: C29), which has established its position in public housing construction locally, may benefit from the redevelopments arising from the freeing up of space at Paya Lebar and Tanjong Pagar. It is notable that Yongnam and Pan-United were also involved in past projects at Changi Airport.

Foolish Bottomline

Some of the plans mooted are set to take place only after 2030, which is still more than 17 years into the future. Investors have to practice due diligence and understand that it will take time for the plans to bear fruition and companies mentioned above to benefit, if at all.

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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.