Fuel Spikes in Construction Boom, Govt Support, and Contractors To Watch

Singapore’s construction sector in 2026 finds itself balancing unprecedented public sector demand against unexpected external cost pressures arising from the Iran war.

PhillipCapital analyst Ben Yik outlines this dynamic in a report, describing where government-backed megaprojects are successfully outweighing the margin headwinds caused by the war.

earthworks illustrn

The conflict drove diesel prices up by a staggering 104% year-on-year, reaching a record high of S$4.6 per litre in April 2026.

On a three-month moving average basis, this reflects a 43% year-on-year increase, representing the sharpest spike since the 2022 Russian-Ukraine war, according to PhillipCapital.

Naturally, contractors heavily reliant on diesel-powered equipment—such as those executing earthworks, foundation piling, and roadworks—are exposed to these surging costs.

Government will co-share financial burden

Recognizing the sector-wide pressure, the Building and Construction Authority (BCA) announced a crucial relief measure in April 2026.

The government will co-share the financial burden by covering 50% of the direct additional costs resulting from diesel and bitumen usage for the period between March 1 and May 31, 2026.

constrnstocks phillip5.26

The demand outlook remains bright, effectively buffering the industry.

The BCA projects a massive S$50 billion in contract awards for 2026, which is an impressive 61% higher than the 20-year historical average.

Notable projects slated for the remainder of 2026 include the Changi Airport Terminal 5 development (with a total contract value of S$16–20 billion), the Marina Bay Sands expansion (S$8–10 billion), the Tuas Port Phase 3 expansion (S$2–4 billion), and the new Tengah General and Community Hospital (S$2–3 billion).

The medium-term forecast is equally promising, with the BCA projecting S$39–46 billion in yearly construction demand from 2027 to 2030, a 37% increase over historical averages.

Relatively insulated

"We remain OVERWEIGHT on construction-related companies. We believe the Singapore construction sector remains relatively insulated from the Middle East conflict, as labour and raw material supplies remain available."
-- Ben Yik, analyst

However, private sector construction demand has softened due to broader market uncertainties—with industry private contracts dropping by 27% year-on-year in the first two months of 2026.

Individual companies are navigating these waters differently based on their operational structures.

For example, building materials players like BRC Asia are expected to face short-term margin impacts, as diesel constitutes roughly 10% of its cost of goods sold, said PhillipCapital.

Conversely, contractors like Soilbuild Construction are less exposed since major ventures like their S$648 million PSA Supply Chain Hub project have already advanced past the diesel-intensive piling stages, said PhillipCapital.

The Undervalued Singapore companies on HKSE

Years ago, several Singapore construction companies chose to list on the HKSE.

Today, they sit largely overlooked by investors in Hong Kong (who are unfamiliar with the Singapore story) and by Singapore investors who are unfamiliar with them too due to zero Singapore analyst coverage because of their foreign listing.

As a result, these contractors trade at steep discounts despite strong balance sheets, solid order books, and earnings growth.

In some cases, valuations fall below net cash. Take a look:

Singapore-based Construction Companies Listed on HKSE
Company	Stock price (HK$)	Market Cap (S$M)	Net Cash (S$M)	Order Book (S$M)	P/E
HPC	0.168	44	66	1,370	7.5x (core)
Kwan Yong	0.43	56	88	715*	4.3x
CTR	0.214	49	76	377	6.3x
Chuan	0.24	41	(15.2)	767	2.6x

Financials are based on reported statements covering the last 12 months.
Net cash excludes contract liabilities as they are cash advances from clients.
* includes projects in progress and projects yet to start.

Briefly:
• HPC Holdings (1742.HK): It delivered a dramatic turnaround in FY2025 (ended 31 Oct 2025).

Revenue surged 67% to S$283.2 million as major projects hit peak execution.

Gross profit swung from a S$5 million loss to S$20.6 million (7.3% margin), while net profit reached S$35.3 million (due to a one-off "fair value gain on a bargain purchase") versus a prior-year loss of S$8.5 million.

The order book stood at a robust S$1.37 billion, backed by net cash S$66 million.

• Kwan Yong Holdings (9998.HK): Reported strong TTM revenue of S$252 million.

Net profit rose sharply to S$17.7 million.

Cash remained exceptionally strong at S$150 million (or S$88 million excluding cash advances from clients) with negligible debt, providing a buffer exceeding market cap.

• CTR Holdings (1416.HK): Posted solid growth with TTM revenue at S$248 million and net profit S$11.5 million.

The company sat on a huge net-cash position of S$75.6 million and an order book of S$377 million as at end-Aug 2025.

• Chuan Holdings (1420.HK): Benefited from strong earthworks demand.

Profit shot up 132% to S$19 million on higher margins (21.3% gross), with revenue reaching S$170 million and an expanded order book of S$767 million.

Fuel Spikes in Construction Boom, Govt Support, and Contractors To Watch

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