[SINGAPORE] SAC Capital hiked Soilbuild Construction’s target price to S$1.10 and maintained its “buy” call. The target price represents an upside of 37.5 per cent from the counter’s last trading price of S$0.80 as at 3.12 pm on Wednesday (Apr 2).
Shares of Soilbuild were trading 1.9 per cent or S$0.015 higher at the time.
The target price revision comes on the back of “solid execution, improving profitability, and (a) strong order book”, said the research house in a Mar 27 report.
As at end-December, the group’s order book stood at S$1.26 billion. In 2024, Soilbuild secured a S$647.5 million contract for the construction of PSA Supply Chain Hub @ Tuas – its largest ever contract win.
Looking ahead, SAC Capital estimates the group’s order book to be around the same level for FY2025 and beyond.
It forecasts that every 10 per cent increase in its order book would lift net profit for FY2025 by 15 per cent.
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SAC Capital noted that the group’s continued focus on high-spec manufacturing projects and internal precast capabilities have enhanced profit margins, contributing to a stronger financial profile.
It added that the group’s multi-disciplinary approach and strategic diversification into industrial and zero-energy projects position it for continued success.
Soilbuild’s positive outlook is also driven by strong demand from the public and private sectors. Some S$47 billion to S$53 billion in construction contracts are expected to be awarded this year, according to the Building and Construction Authority.
Potential challenges for Soilbuild include competitive pressures in the construction sector, potential project delays and material cost inflation.
However, SAC Capital believes the group’s solid order book and strategic focus on sustainability would help in mitigating these risks.
In the latest FY2024 results, Soilbuild’s revenue rose 58 per cent year on year to S$391.8 million. Earnings more than trebled to S$26.6 million – a significant reversal from the group’s three straight years of losses between FY2020 and FY2022.
Singapore is working to establish itself as a regional hub for advanced manufacturing.
Group chief executive officer Lim Han Ren said in an interview with The Business Times that this will naturally attract more MNCs which require high-spec industrial spaces – a niche that Soilbuild has carved in the construction space.
He noted that the group is “well-positioned to capitalise on these opportunities”.
