Plunge in private construction projects to hit KSH Holdings

A 16% to 34% dip in total construction demand looms according to the BCA with the bulk coming from KSH's priority segment.

Public demand appears likely to fall to S$13b-S$15b in 2012 from S$15.2b in 2011. The weakened outlook may put downward pressure on KSH Holdings' construction business over the mid-term.

Meanwhile, en-bloc opportunities for mixed developments with retail components could be key drivers ahead for KSH and could offset the weaker private construction outlook.

Here's more from OCBC Investment Research:

Private construction outlook continues to look weak. While KSH Holdings’ order book is currently relatively strong at S$467m, the rate of book replenishment could be uncertain ahead. The Building and Construction Authority of Singapore is forecasting a 16% to 34% dip in total construction demand to S$21b-S$27b in 2012 from S$32b in 2011, with the bulk of the dip expected to come from lower private construction demand, at S$8b – S$12b in 2012 versus S$16.8b in 2011.

Public demand would only fall marginally to S$13b-S$15b in 2012 from S$15.2b in 2011. This is in line with the view that the domestic residential sector could soften somewhat going forward given persistent macro headwinds from Europe and potentially more property curbs from the government. Since KSH has historically been focused on private construction projects given the higher profit margins involved, it seems the weakened outlook would likely put downward pressure on its construction business over the mid-term.

En-bloc opportunities to feature ahead. KSH has a strong balance sheet with net gearing at a low 4.1%, and cash and equivalents of S$65.2m. Together with its expertise in construction, KSH is well-poised to add value as a JV partner with larger developers, particularly for those with higher leverage. Already KSH is seen to be taking stakes in the redevelopment of Hong Leong Garden Shopping Centre, Seletar Garden and 11 King Albert Park.

Looking ahead, en-bloc opportunities for mixed developments with retail components could be interesting propositions for value accretion. Execution at KSH’s redevelopment projects could be key drivers ahead and could offset, to an extent, the weaker private construction outlook.

Also Read

Institution of Engineers sets up new board to promote faster chartership registration

Hanwha raises offer to $0.67 to acquire full control of Dyna-Mac Holdings

Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

I want to download the media kit