CGS International (CGSI) analysts Lock Mun Yee and Lim Siew Khee have highlighted BRC Asia BEC , Hong Leong Asia H22 (HLA) and Pan-United Corp P52 as potential beneficiaries from the plans laid out by Prime Minister Lawrence Wong in his first National Day Rally speech on Aug 18.
The construction sector is a potential beneficiary, say Lock and Lim in an Aug 19 note on the Singapore market. “The raft of infrastructure and public housing projects planned reinforces our view of continued strength in Singapore’s construction activity over the next five years, which could benefit all three building material companies under our coverage.”
BRC Asia and Pan-United are both pure-play construction players in Singapore, say Lock and Lim, while they view HLA as an “underappreciated proxy” for the Singapore and Malaysia construction industry upcycle, given that its current share price implies 2.5 times price-to-earnings (P/E) for its building materials unit. The CGSI analysts also see “strong earnings growth” for HLA over FY2024-2025.
Lock and Lim have “add” calls on all three Singapore-listed firms, with target prices of $2.40 for BRC Asia, $1 for HLA and 72 cents for Pan-United.
BRC Asia is CGSI’s top pick in the construction sector, given its “attractive” dividend yield of 8% so far this financial year. “We believe the group’s high dividend payout of 60% is sustainable over FY2024-2026 amid healthy industry fundamentals and its balance sheet strength.”
Meanwhile, Lock and Lim like Pan-United for its “healthy” FY2024-2025 earnings growth, with 6% dividend yield and an “undemanding” valuation of 3.7 times 2025 enterprise multiple over ebitda (EV/ebitda), at 1 standard deviation below its historical average.
See also: PM Wong unveils 'major reset' of several policies in first National Day Rally speech
Renewing social compact
In his maiden National Day Rally speech, Wong touched on policies relating to families, jobs, housing and education to renew the social compact, foster greater inclusivity and create a united Singapore.
On housing, the HDB built-to-order (BTO) priority access scheme will be extended from mid-2025 to singles buying flats near their parents.
See also: RHB initiates coverage on CSE Global with ‘buy’ call with TP of 58 cents
There will also be an increase in housing grants under the Enhanced CPF Housing Grant to support lower-income families.
The ministry is on track to launch 100,000 BTO flats from 2021 to 2025, said Wong, and the waiting time for BTO flats will be shortened to under three years over time, from four years currently, by building ahead of demand.
Wong also unveiled the Kallang Alive masterplan, including a new 18,000-seat indoor arena, will be built to host top-tier events. National training centres and Singapore Sports School will be sited together at Kallang.
A 120km waterfront coastline will be built, with new precincts established, such as Nicoll, Kampong Bugis, Tanjong Rhu as well as Marina South and Marina East. New HDB housing will also be built at Tanjong Rhu.
Elsewhere, mandatory paternity leave for fathers has been increased to four weeks, with parents receiving additional 10 weeks of shared paid parenting leave from April 1, 2025.
This will be implemented progressively starting with six weeks for babies born from April 1, 2025, and the full 10 weeks to be implemented a year later.
There will also be support for larger families, such as those having a third child or those with three or more young children, with details to be introduced in Budget 2025.
For more stories about where money flows, click here for Capital Section
The additional 10 weeks will be paid by the government.
Meanwhile, a new SkillsFuture Jobseeker Support Scheme will provide temporary financial assistance of up to $6,000 over six months. Workers will have to go for training, career coaching and job-matching services.
A new training allowance under the SkillsFuture Level-Up programme, previously announced in Budget 2024 for full-time courses, will be extended to part-time courses.
The Gifted Education Programme (GEP) will be discontinued and replaced with a new approach to stretch students in their areas of strength and interest.
Prior to the midday break on Aug 20, shares in BRC Asia were trading flat at $2.18; while shares in Hong Leong Asia were trading 1.5 cents higher, or 2.11% up, at 72.5 cents; and shares in Pan-United were trading 0.5 cents higher, or 1% up, at 50.5 cents.
