Broker's take: Construction stocks resurrect after Budget 2017 brings forward public projects

SEVERAL construction stocks saw a flurry of activity on Tuesday, a day after the Singapore finance minister Heng Swee Keat said the government would bring forward S$700 million worth of public sector infrastructure projects to fiscal years 2017 and 2018.

Typically thinly-traded Swee Hong was trading around S$0.015 a share, up S$0.001, or 7 per cent. More than 9 million shares changed hands. Similiarly, Lian Beng was trading around S$0.510 a share, up S$0.005 , or almost 1 per cent.

Shekhar Jaiswal, Head of Research at RHB Reseach Institute, Singapore, said construction companies would benefit as the government brings forward public infrastructure projects.

"Local construction firms would be able to bid and participate in these projects, which include upgrading of community clubs and sports facilities,'' he explained.

RHB sees construction companies like Lian Beng Group, Swee Hong and Hock Lian Seng Holdings as key beneficiaries to the news. It added that it expects some spillover benefits to flow down to ISOTeam, which was trading around S$0.40 a share. It has a target price of S$0.59 for the building maintenance and estate upgrading company.

Hock Lian Seng was trading around S$0.525 a share at 03:46pm.

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