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Construction sector

could anyone detail wat "macro-induced concerns" cover/mean????

 

Credit Suisse lowers target prices forconstruction stocks to reflect "macro-induced concerns." Hong Leong Asia target cut to $2.80 from $4.00; Tat Hong target cut to $2.75 from $3.65; Tiong Woon target cut to $0.65 from $0.90; Yongnam target cut to $0.22 from S$0.28. All 4 stocks kept at Outperform. Broker says, growing order books reinforce positive view for medium-term but average order backlog has been declined, possibly due to slowing contract momentum, postponement of public sector projects. Notes construction companies under coverage have underperformed wider market year-to-date; implies reduced liquidity, heightened risk aversion toward smaller cap companies.

 

Lian Beng jumped today as investors bet that the company will win more contracts to build the 2 upcoming IRs. It said after the close of trade on Wednesday that it had won a $58.5m construction deal for the planned Marina casino. Other construction stocks jumped as well.

 

 

"The construction sector is still strong and it will not be affected by the subprime problems in the United States," a trader with a regional brokerage said.

The upcoming Marina IR is expected to account for about 20% of the $19-$22b construction deals to be awarded in '07, Goldman Sachs analyst Yoke Fong Chee said in a note to clients.

Yongnam is expected to be the front-runner for steelwork contracts and may win more than 50% of the potential structural steelwork and strutting deals, Yoke said.

 

Hi zhuge liang, thanks for sharing. Any info on LKH ?

 

Shares of construction firms such as BBR, Yongnam and CSC rose on market expectation that the companies will clinch contracts for building part of the Sentosa IR.

"Talk is that Genting will be awarding the casino contracts in Jun or Jul, and we're only left with Jul now," said a local dealer.

Shares of Yongnam, which has a stock market value of US$354 million, rose to hit an all-time high of $0.535. BBR, with a market capitalisation of US$161 million, climbed to a 5-month high of $0.19. CSC rose to $0.48, a level last seen in Jul '99. The company has a market cap of US$331 million.

 

Total construction spending will hit at least $55 billion for the next few years, driven by strong residential and commercial demand, Goldman Sachs said in a note on Thursday. Tat Hong and Yongnam will ride on the uptrend, it said.

 

luckily See Hup Seng don't use sand & granite.....

 

Indonesia said it was considering a ban on exports of granite --
a move which could hurt construction projects. Indonesian authorities detained 24 tugboats and barges carrying granite chips this month, just weeks after Jakarta banned all sand exports.



CSC, BBR, Lian Beng and Yong Nam are all down.

 

some correction on this info : 

Construction stocks rallied on hopes that the price of sand could likely fall to S$20-S$30 per tonne from the current S$40.


The sands price fixed by govt & BCA is $25 per for the month of Feb 2007. March/April/May is fixed at $60 per ton.

free market price range from $30 to $40 per ton now, so free market price is slightly higher than govt price. after Feb 2007, it is likely to follow suite and jump above $60 per ton.

 

Stocks and factors to watch:

Construction stocks rallied on hopes that the price of sand could likely fall to S$20-S$30 per tonne from the current S$40.

The Business Times cited the Singapore Contractors Association saying that the price of sand would be "fixed by the government for the next few months" as authorities release sand from its stockpile beginning Thursday.



Construction and engineering firm Lian Beng Group (LIBG.SI: Quote, Profile , Research) jumped as much as 15.3 percent to S$0.34.

BBR Holdings (BBRS.SI: Quote, Profile , Research) rose as much as 7.1 percent to S$0.15 while CSC Holdings (CSCH.SI: Quote, Profile , Research) went up as much as 6 percent to S$0.265.

Yongnam Holdings (YNAM.SI: Quote, Profile , Research), which makes foundation work using steel, rose 4.8 percent to S$0.22.

All four stocks were actively traded, with Lian Beng, CSC and Yongnam dominating the volume chart in the broader market.  

 

ya, by that time, they could be using artificial sand to construct buildings rite?

 

why it will affect const co profits ?? because at this moment, the profits margin is still very thin, const just recover from the slump in year 2000.

the impact is not much on property co, because now the profits is very good, they can easily absord 5% to 8% increase in const cost if they are making 30% to 60% margin easily.

But not the const co that are earning thin margin of 3% to 5% now, incresement of 5% cost will hit the profits of const co hard.

going forward, in the future, the margin will improve, but not an overnight jump, it will go up gradually. in longer  term say 2008 and 2009, const co will be doing well.  

 

Singapore is such a small country so the sand issue should really be a serious concern not to companies but people like us. We will have to pay for higher property prices in future. Construction companies will not take up a project if it loses money. So, this problem is really inherent to Singapore only. The construction pace can slow down but it will affect the economy of Singapore as a whole. This problem could be a blessing in disguise as this is only the start of the construction boom. There are many developments that have not been completed or started yet. This could be the time to source around for alternative sandbanks or new technologies to nullify this threat.

 

So that means local construction costs will go up that will drive property prices even higher. Looks like there could be a bubble forming already. I suspect this bubble will also push new HDB flats prices up as well. With this scenario, it would be difficult for foreign investors to look for bargains as Singapore property market will not be competive compared to regional markets anymore.

 

I already dumped all my construction counters the moment I read the sand news and haven't regretted it yet, since the uncertainty is too much to bear.

 

overseas projects unlikely to be affected.

 

Hi doctor2a if  companies have projects outside Singapore, will they suffer heavy losses as well? I think some of our construction companies have projects in Sri Lanka, Vietnam??? 

 

I can't predict market director, no one can.

also I might be wrong, const shares could surge and surge and surge non-stop. but base on what happen recently, short term doesn't look good. 

as a insider in const industry, I still think in the longer term up 2009, const is still good.

if you are a Warren Buffett type of  investor, no worry.

 

thought u r in the medical industry....anyway...thks for your info....just hope things do not go your prediction :)

 

you give me too much respect already. If I can talk down a co, I will be rich.

always remembers, nobody in this world can talk down or up a market. no way !

I only try my best to present the facts openly, beause I am in the const industry. what I have is only info, not recommendation. the money is your, you decide yourself.

afterall, it is up to you guys to look at the info and do an analysis.