On Friday, the government made an announcement of re-opening borders to vaccinated foreign workers from most countries.
This is an important moment for many companies here because they are reliant on foreign manpower which in turn reduces their cost. Furthermore with India case counts falling and is being vaccinated with COVIDshield (developed by AstraZeneca), further relaxation of border measures for vaccinated travelers may happen soon.
Construction companies like KSH holdings, Hock lian seng, TTJ holdings are bound to benefit from this. For example KSH holdings has a larger orderbook in the private sector market (which means many of their projects are not considered critical infrastructure which were exempted from border measures); with the lifting of borders, they will be able to tap on more sources of foreign workers for their projects. A lower manpower cost will improve profit margins.
Due to the recent border measures, companies like KSH had impaired for expected cost increases in its current projects and recognised them as losses beforehand. However, the reopening of borders may mean that such impairment will not occur and becomes a gain.
All in all, I am re-evaluating the construction industry. The recent measures is going to result in earnings expansion and with the government needing to prime pump the economy, more projects will come in. The increase in revenue and improvement in profit margins may just be what makes it ripe for construction companies to experience a share price re-rating.
<Not vested in any of the mentioned counters yet>