Singapore’s Prime Minister Lawrence Wong’s recent National Day Rally speech, which outlined plans to enhance the social compact, included infrastructure initiatives that our analysts believe could benefit the local construction sector.
On fulfilling housing aspirations, the HDB built-to-order (BTO) priority access scheme will be extended from mid-2025F to singles buying flats near their parents, as the government is on track to launch 100,000 BTO flats from 2021 to 2025.
There will be an increase in housing grants under the Enhanced CPF Housing Grant to support lower-income families. Additionally, the waiting time for BTO flats will be shortened to less than three years by building ahead of demand.
On new developments, the Kallang Alive Masterplan will include a new 18,000-seat indoor arena to host top-tier events, national training centers, and the Singapore Sports School. Besides that, a 120km waterfront coastline will be developed, with new precincts such as Nicoll, Kampong Bugis, Tanjong Rhu, Marina South, and Marina East.
The raft of infrastructure and public housing projects planned is expected to boost Singapore’s construction activity over the next five years. Our research team has identified pure play construction players in Singapore, namely BRC Asia Ltd (SGX:BEC), Pan-United Corporation Ltd (SGX:P52), and Hong Leong Asia Ltd (SGX:H22).
Among these companies, BRC Asia is a top pick based on its attractive dividend yield of circa 8% for FY2024F. The group’s high dividend payout of approximately 60% is sustainable over FY2024F to FY2026F amid healthy industry fundamentals and its balance sheet strength. Meanwhile, both Pan United Corporation and Hong Leong Asia are expected to have good earnings growth from FY2024 to FY2025.
The initiatives announced in the National Day Rally reflect a forward-thinking approach to Singapore’s development, paving the way for a dynamic and evolving urban environment.
Disclaimer: ProsperUs Manager of Content Hailey Chung doesn’t own shares of any mentioned companies.
Reference
Singapore Strategy | Charting the Path Forward || Aug 19, 2024
