Surge in HDB construction - what stocks will benefit?

28 May 2011 16:10 #6099 by pine
SINGAPORE - Just days into his new job as National Development Minister, Mr Khaw Boon Wan (picture) has instructed the Housing and Development Board (HDB) to build flats "ahead of demand" - a significant change in policy from the "Build To Order" (BTO) approach which has been in place for the past 10 years.

Mr Khaw's announcement coincided with HDB's launch of six BTO projects - the largest number launched at once. In addition, he confirmed that the number of BTO units this year would be increased from 22,000 to 25,000 units, by bringing forward projects scheduled for early next year.

Writing on his blog "Housing Matters", Mr Khaw said: "Given robust demand, I told them proceed to build, knowing that the orders will definitely come."

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31 May 2011 21:17 #6122 by Mel
Koon is up 1 cent in a quiet market ....Now 27.5 cent. A clear beneficiary of the HDB building boom to come.

KOON, WEE HUR, LIAN BENG: To benefit from HDB building boom?

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01 Jun 2011 05:13 - 01 Jun 2011 05:43 #6130 by greenrookie
Koon caught my attention too due to it's attractive PE, upon closer look I realized this stock is indeed interesting for several reasons: 1) precasting division has been winning contracts and has much spare capacity yet. 2) however, if 1 is to expect the hdb boom to directly catalyst the stock, one might have to adjust it's expectations. 1) it can only win hdb contracts through it's Econ precasting subsidiary and cannot tender directly to build hdb flats as it has only a B1 license for building, and the contracts revenues from precasting is lower than building contracts. Precasting will form a significant bulk of it's revenue in 2011 judging by the proportion of it's revenue. There is however 1 wild card that can really swing both ways for this counter, that is the Vietnam port project that is worth 220 million. The existing order book dwarf when compare to this project. However, this project has been hit by delays in some approvals in Vietnam since nov and that is when the continous raising price of this counter is broken and some correction has since taken place. It's has been a year since the announcement of the project and it's still in limbo, with Koon buying over the shares of the partner of the joint venture recently. Take comfort that it means management is confident that the project will still go through, construction has been halt or not started since management mention about conditions that safeguard the company by starting work only when all approvals are in place. I however suspect money has been spent in this project since the management mention that construction will start immediately when they announce this project. And they mention that their partner for this jv will bear all costs prior to the transfer / sale of shares to Koon. The big catalyst for this stock hence will not be HDB but how this project pans out
Last edit: 01 Jun 2011 05:43 by greenrookie.

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01 Jun 2011 16:00 #6132 by yeng
hello greenrookie, Koon is dirt cheap and going to be a major beneficiary of the pre-cast work from HDB's building boom. on top of that, the trend in the construction industry is in its favor as worker's levy shoots up and contractors see the benefits of pre-cast instead of getting workers to set up on site.

Yes, the Viet project is really big but until it actually materialises, there is enough - more than enough - work coming Koon's way (via the hdb building programme that will shoot up). And at pe of 3X, Koon can't get cheaper , can it?

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01 Jun 2011 16:50 - 01 Jun 2011 16:52 #6134 by greenrookie
Yes indeed, I believe demand for 2011 will hold an will be in the upper range of the BCA forecast of 22- 28 billion. I think earning should improve or maintain and that PE should still be attractive going forward. However, as compare to the s- chips I dun think construction stock in Singapore will cheong given that bulk of money of local construction jobs is going to the mrt lines and the remaining money is split between private and public housing so the pie from hdb is not really that big... Yes at PE 3 an's potential for earning growth in 2011, I must say this stock has very high safety margin but perhaps the potential for good appreciation of price (>15%) will only come when others see the stock going lower than PE 3 going forward. Since there is still some time before the next earning season I will bid my time and see how the general market pans out. My remiser told me that the market correction has bottomed and is resuming it's bull run, the sad part is, this is contrary to my own expectations, so I decide to hold my ammo first. But yes, by and by, this stock has high potential for price appreciation if the vietnam project doesn't screw up and cause Koon to be caught in the same situation like Csc got caught in the change motor sports hub whereby impairment and write down drag down earnings
Last edit: 01 Jun 2011 16:52 by greenrookie.

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01 Jun 2011 17:50 #6135 by Little Bird
Agreed with Yeh, show me earnings. Lucky escape for me, tempted to enter near high but check charts as precaution. Saw run up too fast more than triple from 9cts and pulled out. guess got lucky

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