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Why The 'Boring' Engineering Of Nordic Group Is The Smartest Play Of 2026 · Investor Exchange

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  At Investor Exchange, it's time for another podcast with your hosts, David and Brenda.
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  Welcome to The Debate. Today, we're digging into Nordic Group,
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  that's ticker NRDSP on the Singapore Exchange.
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  A recent research report has everyone talking, and the core question is pretty clear.
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  Are the company's massive new contract wins a sign of real long-term growth?
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  Or is this just, you know, a temporary bright spot for a company that's still
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  vulnerable to its old cyclical problems?
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  I'm arguing this is a genuine turnaround. I see a buy opportunity here with
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  a potential 37% upside, driven by key sectors like defense and sustainability.
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  And I'm here to urge some caution. I see the same report, and frankly,
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  I see a potential value trap.
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  We're talking about a company that's seen its revenue fall for a couple of years
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  and its margins get squeezed.
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  So until they can prove these new contracts are actually profitable,
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  I think the risks, especially the geographic concentration and cost pressures,
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  they just might outweigh the rewards.
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  I appreciate the sithicism, really, but let's look at what's happening right now.
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  We're not talking about hypotheticals. In December 2025 alone,
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  Nordic locked in over 70 million Singapore dollars in new contracts.
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  That's pushed their order book to almost $210 million.
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  When you have that kind of visibility and you add a projected dividend yield
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  of, what, 4.9% for fiscal 26?
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  Well, you've got a pretty solid safety net.
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  Investors are literally getting paid to wait for this growth story to play out.
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  See, that's exactly where I pump the brakes.
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  An order book is just a promise of future work. It's not a promise of future
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  profit. You have to look at the trend.
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  Revenue fell in 23 and 24 because of project delays. But the bigger red flag
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  for me is the margin compression.
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  I mean, they've slid from a pretty healthy 28% gross margin all the way down to 23.
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  So my question is, did they win that $70 million by just underbidding everyone else?
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  Because if so, that isn't a turnaround. That's a race to the bottom.
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  I think you're blaming the company for what were clearly global macro headwinds.
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  That margin squeeze happened when inflation and interest rates were hitting everyone.
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  But that's changing. Look at the data.
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  Singapore's industrial production shot up by almost 29% in October 2025. The cycle is turning.
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  And Nordic has pivoted its business. Almost half their revenue now is for maintenance services.
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  That's recurring, sticky income that helps smooth out the very volatility you're worried about.
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  Smoothing out is maybe a generous term. Let's be real.
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  Over 50% of their revenue is still from project services.
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  And for our listeners, that means big one-off jobs. It's an inherently lumpy business model.
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  You know, feast one quarter, famine the next. So one good month of industrial
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  data doesn't just erase that fundamental risk.
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  If that economic recovery falters, well, Nordic is left with a very expensive
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  team of specialists and not enough work to go around.
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  But you have to look at what those projects are. This isn't just generic construction.
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  Through their acquisitions, Starburst and EnviPure, they are now deeply embedded
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  in Singapore's national priorities. We're talking about things like the Green
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  Plan 2030, the huge Tuas Nexus water plant, and increased defense spending.
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  These aren't projects that put on hold when the economy gets a little shaky.
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  They are government-backed imperatives.
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  Government-backed or not, they're facing a new and I think brutal competitive threat.
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  You talk about a moat, but I'm looking right next door at the Johar Singapore Special Economic Zone.
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  That could open the floodgates for low-cost competitors to bid on these exact same projects.
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  Nordic's cost base is Singaporean. If a rival from Johar can do the work for
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  20% less, what happens to Nordic's pricing power?
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  And that just highlights my biggest concern.
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  Almost 74% of their revenue is tied to Singapore.
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  That is a massive single market risk. I think you're really underestimating
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  their financial resilience here.
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  Even if competition heats up, Nordic has the best defense possible,
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  a fortress balance sheet.
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  As of last September, their net gearing was down to just 3%.
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  They're practically debt-free.
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  So while their competitors might be struggling with loan payments,
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  Nordic has the dry powder to make more acquisitions or just win a pricing war.
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  They are financially bulletproof.
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  Okay, being debt-free is good. I'll absolutely grant you that.
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  But a clean balance sheet doesn't fix a broken cost structure.
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  Raw materials make up almost 40% of their cost of sales.
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  So if steel or energy prices spike again because of some geopolitical event,
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  that 23% margin gets vaporized, no matter how much cash they have.
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  They take the price. They don't make the price.
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  That's what squeezes the bottom line. Well, at the end of the day,
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  investing is about weighing the odds.
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  And here you have a company paying a nearly 5% yield with a record order book
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  in sectors where the government has to spend money.
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  The downside feels capped and the upside is tied to a clear industrial recovery.
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  And I'd argue the burden of proof is still on them. I need to see one,
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  just one good quarter where that order book translates into higher margins,
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  not just higher revenue.
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  Until they prove they can handle regional competition and restore their profitability,
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  I'm happy to watch from the sidelines.
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  A classic clash of visible catalysts versus proven performance.
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  And that brings us to the end of our time. Indeed. This content is intended
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  to serve strictly and only as an informational,
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  independent, objective summary of recent events and should in no way be interpreted,
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  construed, or relied upon by any party as inside information or financial advice.