2018 will be the year of major infrastructure projects, based on the pipeline of projects projected by Singapore’s Building and Construction Authority. The public-sector construction demand would be worth between $18-23 billion per annum for the next three years in five iconic projects. This could lead to increased construction activities for several main contractors, subcontractors and building material suppliers that will be involved in these infrastructure projects.

  1. North-South Corridor

NS CorridorSource: LTA

The North-South Corridor is expected to be worth $15 billion in construction value. CIMB expects the tender packages to be awarded in 2018 and 2019.

  1. Deep Tunnel Sewerage System Phase 2

Deep tunnel sewerageSource: AECOM

The Deep Tunnel Sewerage System Phase 2 is another major infrastructure project for Singapore. It comprises of a massive 100km used-water conveyance network that will run largely under the Ayer Rajah Expressway, crossing undersea at Tuas Bay and ending at deep inlet shafts within the future Tuas Water Reclamation Plant.

  1. Circle Line 6

The 4-km Circle Line 6 will close the loop for the MRT Circle Line by connecting HarbourFront Station to Marina Bay Station. Civil contracts worth $2.3 billion have been awarded in 2017 to several main contractors, which CIMB believes will lead to opportunities for other civil engineering specialists to take on subcontractor works.

  1. KL-Singapore High Speed Rail

Another iconic project that will be awarded at end 2018 is the tender for KL-Singapore High Speed Rail worth $14 to $15 billion. Designing, building, financing and maintaining all rolling stock and rail assets, as well as operating these assets for the 350km high-speed rail will create opportunities for sub-contracting of engineering works to listed construction companies.

  1. Second CBD in Singapore: Jurong Lake District

jurong lake

Using the Marina Bay area development as a reference, CIMB foresees the redevelopment of Jurong Lake District to lead to $3.6 billion worth of construction contracts. Urban Redevelopment Authority (URA) is looking to finalise the master plan of Jurong Lake District by 2019.

Investors Takeaway: CIMB’s Top 3 Investment Themes For Construction Companies

1. Pick Up Laggard Main Contractors

Main contractors are appointed by the principal and are responsible for the total construction and completion of the building project. They execute the architect’s plan and design the actual structure in some occasions. Wee Hur and Lum Chang are two of the major builders in this space. Right now, both companies’ order book value is below their historical 6-year average.

Wee Hur Holdings (Wee Hur)

Wee Hur’s core businesses include construction, property development and dormitory operations in Singapore. Its current construction order book stands at $304 million comprising of mainly residential and industrial projects. Wee Hur’s current project pipeline includes Parc Botannia and Mega@Woodlands a condo project and several purpose-built student accommodation projects in Australia.

Lum Chang Holdings (Lum Chang)

Lum Chang is an established main contractor firm with a construction order book of $542.6 million. Its construction order book comprises of residential, commercial and civil infrastructure works in Singapore. In 2018, Lum Chang is expected to launch One Tree Hill Gardens within the prime Orchard Road district.

2. Structural Struts And Steelworks


Steel strutting systems are an integral part of underground constructions. It provides deep excavation support during the construction of stations and tunnels for transportation systems and building of basements. The structural steel also forges the skeletons of buildings and infrastructure. It might not sound sexy, but it is CIMB’s preferred investment theme given its importance in infrastructures.

Yongnam Holdings

Yongnam is a major player in this field with over 40 years of experience in structural steelwork and specialist civil engineering. CIMB highlights several near-term catalysts that could drive Yongnam’s share price in the near term. Given that Yongnam owns the biggest strutting asset base in Singapore and its strong track record, it could clinch at least half of the strut works for the North-South Corridor project that is up for grabs this year.

BUY, TP $0.53

3. Tunnel Construction Specialists

Civil engineering companies that are specialists in tunnel engineering are the ones that take full responsibility for the design, planning, construction, maintenance and safety of tunnels. The construction of Circle Line 6 and Deep Tunnel Sewerage System Phase 2 will heavily involve civil engineering specialists like Koh Brothers.

Koh Brothers Group (Koh Brothers)

Koh Brothers is an established contractor, developer and civil engineering specialist with a legacy in drainage management and water resource engineering. Koh Brothers has already secured two landmark projects in 2H17, i.e. Circle Line 6 and the Deep Tunnel Sewerage System Phase 2. This has boosted its construction order book to $844 million.

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