Overweight Stocks on Construction Wave, says Broker. One stock is lagging way behind

A Sector in Full Swing
The Singapore construction sector is currently experiencing a robust upswing, creating significant opportunities for investors.

According to Phillip Capital report dated 12 February 2026, construction-related companies have risen on average by 26% over the past three months.

This surge is underpinned by strong fundamentals and a pipeline of major government projects that are anchoring sector growth.

Consequently, Phillip Capital has maintained an OVERWEIGHT rating on the sector, signaling confidence in continued outperformance.

Its universe of coverage, however, does not encompass Singapore construction companies listed on the HK Stock Exchange (more on this later).

Category	2025 Contract Value (S$ bn)	YoY Change	Key Drivers / Notes
Total Construction Contracts	50.5	+13%	Overall sector growth
Public Contracts	28.0	+13%	Driven by strong public commercial and residential projects
- Public Commercial Projects	—	+243%	Major contributor to public sector growth
- Public Residential Projects	—	+30%	Continued public housing development
Private Contracts	22.5	+14%	Supported by institutional and civil engineering projects
- Private Institutional Projects	—	+355%	Surge in education, healthcare, or similar facilities
- Private Civil Engineering Projects	—	+258%	Significant infrastructure-related activity
- Private Commercial Projects	—	−76%	Sharp decline in office/retail developments

Source: Phillip Capital

Demand: Higher for Longer

The outlook for construction demand is exceptionally bright. The Building and Construction Authority (BCA) has projected total construction demand to reach between S$47 billion and S$53 billion in 2026, a figure that is 61% higher than the 20-year historical average of S$31 billion.

While 2026 demand is expected to remain flat year-on-year at the midpoint, the quality of this demand is high, driven by mega-infrastructure projects.

Key developments supporting this pipeline include:

Changi Airport Terminal 5 (T5)
Marina Bay Sands (MBS) Integrated Resort Expansion
New Tengah General & Community Hospital
Downtown Line 2 and Thomson-East Coast Line Extensions.

Looking further ahead, the medium-term outlook remains resilient.

Ben Yik 1.25 Ben Yik, analystFrom 2027 to 2030, the BCA projects yearly demand to settle between S$39-46 billion—still 37% above the long-term historical average—supported by institutional projects like the new Singapore University of Social Sciences campus and ongoing public housing (HDB BTO) developments.

PE valuation above 10X

The Phillip Capital report gives detailed valuation metrics for 39 companies, and the sub-sectors' average are as follows:

Key Sector Metrics

Sub-Sector	Avg P/E	Avg P/B	Avg ROE
General Construction	19.4x	3.5x	24.9%
Heavy Lift	12.6x	0.7x	5.0%
Infrastructure	11.9x	2.0x	18.2%
Building Materials	21.8x	2.5x	13.6%
Const. & Real Estate	11.9x	1.1x	9.5%
Engineering/Services	20.6x	5.5x	25.4%

Source: Phillip Capital

S'pore construction company at 1.2X ex-cash PE

HPC Building at 7, Kung Chong Road in the Redhill area serves as HPC's HQ.

In contrast to the peers trading on SGX, a Singapore-based construction company listed on HKSE, HPC Holdings, trades at around 7.5X PE based on its FY2025 results (excluding a big one-off gain).

Its P/B is 0.4 while ROE, 6%.

Notably, as of 31 October 2025, HPC’s work backlog reached a record S$1.37 billion.

That is nearly five times their FY25 revenue, and it is unmatched by many of its SGX-listed peers.

Management has successfully pivoted toward high-spec, higher-margin niches like pharmaceutical buildings and specialized industrial hubs.

Furthermore, HPC’s market capitalization sits at S$58 million (HK$360 million) based on a recent stock price of 22 HK cents.

However, the group holds S$79.13 million in cash.

Subtracting all borrowings (S$13 million) and S$17.29 million in client advances (contract liabilities), the adjusted net cash is an impressive S$49 million (ie, ex-cash PE of 1.2).