CGS International
August 21, 2025

BRC Asia Leads Singapore’s Construction Upcycle: Robust Growth, Market Dominance, and Attractive Dividends

Executive Summary: Singapore’s Steel Giant Surges Ahead

BRC Asia Ltd, covered in the latest CGS International report dated August 21, 2025, continues to demonstrate its strength as the dominant supplier of steel reinforcement in Singapore’s booming construction sector. With a commanding market share and an impressive orderbook, BRC Asia is well-positioned to benefit from the ongoing upcycle in construction activity, particularly with major public housing and infrastructure projects. The company’s consistent profitability, high dividend yield, and strategic expansion initiatives make it a compelling choice for investors seeking exposure to Asia’s resilient building materials market.

BRC Asia Ltd: Riding High on Singapore’s Construction Boom

Market Dominance and Strong Financial Performance

BRC Asia Ltd reported a 24% year-on-year increase in net profit for 3QFY25 and a 14% rise for 9MFY25. This performance is well in line with analyst expectations, accounting for 26% and 77% of full-year forecasts, respectively. Despite a 14% drop in steel prices, BRC’s 3Q revenue increased by 7% year-on-year, implying a significant rise in sales volume—estimated at 22% for the quarter. Gross profit margin (GPM) jumped from 8.5% in 3Q24 to 11% in 3Q25, and core net profit margin (NPM) expanded from 4.6% to 5.3%, reflecting clear economies of scale.

Strategic Wins and Orderbook Strength

– BRC is a key supplier for Singapore’s Housing Development Board (HDB) build-to-order (BTO) projects and holds an estimated 55-60% market share in Singapore’s steel market. – The company secured a S\$570 million contract for Changi Airport Terminal 5’s substructure, contributing to a robust S\$2 billion orderbook as of July 2025. – HDB has launched 58,000 BTO units since 2023, with a further 35,000 units planned for 2026-2027, ensuring a strong construction pipeline through FY29.

Expansion Through Strategic Acquisition

BRC completed the acquisition of a 55% stake in Southern Steel Mesh (SSM) in August 2025. This move is expected to unlock value by updating SSM’s machinery, aligning it to best-in-class practices, and enhancing competitiveness against rivals with outdated technology. Phase 1 of restructuring is underway and will run until March 2026, focusing on upgrading machinery, improving procurement and manufacturing processes, and retraining staff.

Dividend Appeal and Valuation Upside

BRC’s high dividend payout is expected to be sustainable, with a projected FY26 dividend yield of 6.3%. The target price has been raised to S\$4.00, based on FY26 P/E of 12x, in line with the historical construction cycle highs.

Key Financials and Operating Metrics

Peer Comparison: Sector Leaders in Singapore Building Materials

BRC Asia’s performance stands out among its peers, supported by higher ROE and dividend yield. Below is a snapshot of leading companies in Singapore’s building materials sector:

ESG and Operational Risk: Sustainability in Focus

BRC Asia’s ESG initiatives focus on product quality, material efficiency, and workplace safety. The company is committed to robust internal quality management systems, sourcing from suppliers who meet international standards, and reducing scrap generation. Notably:

• 80% of BRC’s workforce in FY21 were foreign workers—a significant operational risk if regulatory changes occur.
• Singapore’s Dependency Ratio Ceiling (DRC) remains a key risk factor, as further restrictions could increase wage costs or disrupt workforce recruitment.
• BRC’s Accident Frequency Rate dropped to 2.9 in FY23 (from 14.3 in FY21), while its Accident Severity Rate fell to 88.4 (from 330.2), highlighting improved workplace safety.

Balance Sheet Highlights and Key Ratios

Risks and Catalysts: What Investors Need to Watch

• Re-rating catalysts include strong improvements in offtake volumes and earnings-accretive M&A activity.
• Downside risks include counterparty credit risks and the potential for an economic slowdown to negatively impact construction demand.
• BRC’s exposure to regulatory changes in labor policies and workforce composition also remains a key operational consideration.

Conclusion: BRC Asia—A Defensive Play with Growth Potential and Yield

BRC Asia’s strategic market positioning, resilient financials, and expanding orderbook underpin its role as a defensive yet growth-oriented play in Singapore’s construction sector. Its dividend yield, focus on efficiency, and proactive expansion through acquisitions make it an appealing choice for investors seeking stability and upside in Asian building materials.

Stock Ratings and Sector Outlook

• Rating: Add (expected total return >10% over 12 months)
• Target Price: S\$4.30 (current price S\$3.64)
• Dividend Yield: 6.3% for FY26F
• Sector Position: Overweight on Singapore Building Materials

Recommendation Framework Explained

• Add: Stock’s total return expected to exceed 10% over next 12 months
• Hold: Total return between 0%-10%
• Reduce: Total return expected to fall below 0%

Total expected return = Percentage difference between target and current price + forward net dividend yield.

Distribution of Ratings (Q2 2025)

Final Takeaways

For investors seeking a robust, dividend-yielding exposure to Singapore’s construction upcycle, BRC Asia Ltd stands out as a compelling investment opportunity. With its dominant market share, forward-looking strategies, and proven operational excellence, BRC is well-placed to deliver sustainable returns in the years ahead.