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White Paper 'to benefit property, transport'
Published on Jan 21, 2013
By Yasmine Yahya
THE Singapore Population White Paper due to be released by the Government later this month will spell good news for construction firms, DBS Vickers has said in a new report.
In the longer term, companies in the transport, property and health-care sectors will also benefit from issues likely to be raised in the paper, it said.
Analysts from the brokerage wrote in a report last Friday that they expect the Government to revise upwards Singapore's population planning parameter from 6.5million to seven million.
"We continue to see long-term benefits accruing to domestic- driven sectors, particularly public transport, property and health care," they said.
"There will be a need for infrastructure to cater to a larger population, so we expect the construction sector to benefit as well."
With the high growth in ridership and gripes about crowded trains, one key focus would likely be on further development of the transport infrastructure to prepare for a larger population, they added.
But while the long-term projection for rail ridership growth will bode well for SMRT, this may be outweighed by near-term cost challenges such as staff, repair and maintenance expenses, they said.
Instead, they prefer ComfortDelGro for its stable growth profile, and have reiterated a "buy" call on the stock.
The construction industry will benefit from continued infrastructure spending, they said.
"While we are positive on construction demand as a whole, we are more bullish on building resource providers as opposed to contractors."
Contractors are operating in a lower-margin, higher-cost environment, they said, while building resource firms will likely enjoy higher sale prices, as demand for resources outstrips supply.
Their top stock picks for the sector are Tat Hong and Pan United, and they also have "buy" calls on Yong Nam, Tiong Seng and OKP.
Property developers will benefit too as the Government appears set to ramp up housing supply, the analysts said.
"These would include those with large landbanks such as City Developments and Bukit Sembawang."
Developers which tap more frequently into the government land sale programme for land parcels, such as CapitaLand, Keppel Land, UOL, Wing Tai and Ho Bee as well as smaller developer-cum-construction companies, will also benefit, they added.
Given that there has been continued focus on population growth and ageing, the analysts said the Government will likely introduce more incentives to encourage Singaporeans to marry and have children.
"One potential beneficiary we see is CordLife Group, which provides cord blood stem banking," they said.
"Assuming there is added incentive for procreation, we expect to see a further perk-up in birth rates from 2014, which could benefit CordLife."
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