Thomson Financial: Singapore's construction stocks extend gains on industry boom

Singapore's construction stocks extend gains on industry boom
10/1/2007 4:24:00 PM

SINGAPORE (Thomson Financial) - Shares of Singapore construction companies extended gains Monday amid the boom in the industry as the city-state transforms into a vibrant global city in a bid to boost economic growth.

Infrastructure projects underway include a new business financial district, a string of new office buildings, hotels, and residential developments, industrial factories and sporting facilities and the two integrated casino resorts.

Credit Suisse expects the equipment and machinery supply companies and the specialist contractors to benefit most from this boom.

"We believe the greatest bottleneck lies in the market for heavy equipment and machinery, given the long lead time and competing demand from markets like the Middle East," it said in a client note.

The research house expects equipment rental rates to grow 10-25 percent year-on-year in 2007 and 10 percent over the next two to three years.

Credit Suisse is maintaining its "overweight" rating on the sector.

"It is perhaps noteworthy that the majority of the companies surveyed believe that the Building and Construction Authority's construction demand forecast of 19-22 billion Singapore for 2007 is conservative, given the strong momentum of orders that they have been receiving, and the contracts they are currently bidding for," it said.

At 4.17 pm, Yongnam Holdings was up 1.5 cents at 42.5 Singapore cents, CSC Holdings was up 1 cent at 35 cents, and Chip Eng Seng Corp was up 1.5 cents at 80 cents. Tat Hong added 5 cents to 2.46 Singapore dollars, Hong Leong Asia rose 10 cents to 3.98 dollars, and Tiong Woon gained 7 cents to 1.18 dollars.