The Building and Construction Authority (BCA) has projected Singapore’s construction demand for 2025 to soar to between $47 billion and $53 billion, marking a significant leap from the $32 billion to $38 billion range forecasted for 2024. This surge is set to drive opportunities for local construction companies, many of which saw their stocks rise following the announcement.
Construction Demand: A 46% Leap
BCA’s 2025 estimate reflects a 46.88% year-on-year increase in nominal terms and, when adjusted for inflation, represents a rise of up to 11.7% above pre-COVID-19 levels in 2019. The boost is attributed to large-scale projects, including:
- Changi Airport Terminal 5
- Expansion of Marina Bay Sands
- Infrastructure for Thomson-East Coast Line Extension (TEL) and Cross Island Line (CRL)
- Woodlands Checkpoint Extension and Tuas Port Development
- Public housing and upgrading works.
These projects follow 2024’s focus on public sector-driven developments such as Built-To-Order (BTO) flats and infrastructure works for the second phase of the Cross Island MRT Line and Tuas Port.
Construction Stocks Surge
BCA’s optimistic forecast sent shares of Singapore-listed construction firms rallying on Jan 23. Here’s a closer look at some notable market movers:
- Ley Choon Group: The underground utilities and road works provider saw its stock jump 16.67% to 5.6 cents, with 25.02 million shares traded, making it the second-highest traded counter on the SGX. Ley Choon recently secured $131.5 million worth of contracts and reported a 35.9% earnings growth for 1HFY2025 to $7.3 million.
- Hong Leong Asia: Considered a proxy for the construction boom in Singapore and Malaysia, its shares rose 1.6% to 95.5 cents. The company reported a 60.9% increase in earnings to $49.5 million for 1HFY2024, with steel supplier BRC Asia—a 20%-owned associate—also benefiting from the upcycle.
- BRC Asia: Shares closed at $2.75, up 1.1%. The company posted a record $93.5 million net profit for FY2024, supported by a $16.5 million gain from an associate disposal and robust domestic project launches.
- Hock Lian Seng: Shares climbed 5.48% to 38.5 cents. The civil engineering company’s earnings soared 128.7% to $20.4 million for 1HFY2024, driven by strong growth across its segments.
- OKP Holdings: Closing at 33 cents after a 1.54% increase, OKP’s 1HFY2024 saw a record order book of $706.9 million and an impressive gross profit margin of 28.2%, though overall earnings dipped.
- Pan-United: The construction materials supplier’s shares rose 2.5% to 61.5 cents. Pan-United is positioned to benefit from increased construction output, with earnings for 1HFY2024 up 34% to $18.6 million.
- Soilbuild Construction: Shares increased 0.64% to 79 cents. The company has secured six contracts worth $306.4 million since August 2024, boosting its total order book to $1.32 billion. Soilbuild’s 1HFY2024 earnings surged 444.5% to $7.4 million.
- Tiong Woon: Shares closed 2.42% higher at 63.5 cents, with earnings for FY2024 up 16% to $18.2 million, largely driven by its heavy lift and haulage segment.
Outlook for 2025
The upbeat projections come amid rising costs linked to mega-projects like Changi Airport T5. However, analysts remain optimistic about the sector’s resilience. Construction output and contract awards for 2024 already exceeded initial forecasts, signaling a robust pipeline ahead.
CGS International analyst Kenneth Tan noted Pan-United’s potential to benefit, estimating that construction output and contract awards exceeded the upper end of BCA’s 2024 guidance by 3% and 13%, respectively.
Riding the Boom
As the construction sector gears up for an ambitious year, investors are eyeing opportunities in Singapore-listed firms that are strategically positioned to capitalize on the demand. With massive infrastructure projects underway and a recovering post-pandemic economy, 2025 could mark a pivotal year for the construction industry and its stakeholders.
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