Construction Sector - Caution on opportunistic developers With rising property prices over the past few years, many opportunistic property developers have jumped into the fray to capitalise on quick profits. However, the tide has since turned following the US subprime problems in mid 07, leading to a massive weakening in buyer sentiment.
With continued rising construction costs exacerbated by higher steel prices, these construction companies turned developers are likely to be saddled with properties that are below current benchmark prices. We maintain our Overweight call but recommend that investors focus on pure-play construction companies or specialist contractors. Our top picks are Tat Hong Holdings, Tiong Woon Corporation and CSC Holdings.
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