+ Volume and construction activities picked up from May (>2x higher MoM), though they are still below pre-COVID levels. Construction progress is hampered by the shortage of dormitory beds, workers and step-up in safety enforcement on worksites and construction personnel. Demand, however, remains robust, underpinned by public housing, record government land sales for private housing, and infrastructure projects. BRC has an orders on hand of S$1.34bn.
+ BRC is largely insulated from potential bad debts through credit insurance. Some construction companies are facing financial stress due to lower-margin legacy projects, project delays and rising costs. For BRC, the impact is non-delivery/cancellation of outstanding orders, but there is no collection risk for jobs that have been delivered.
– Net margin remains low at 4.9%. We think margins might not return to FY22’s 5.3% due to higher share of trading business which are lower-margin, and large-scale infrastructure projects.