Pan United Corporation - A Concrete Opportunity
- As the largest ready-mix concrete (RMC) supplier in Singapore with a ~40% market share as at end-FY21, Pan United Corporation (SGX:P52) is well positioned to ride on the construction upcycle, in our view.
- BCA also expects RMC demand to reach its highest level since 2017 (+7-20% y-o-y) in 2022F.
- Pan United is a leading provider of high-grade green concrete, namely its proprietary CarbonCure, designed to reduce carbon emissions. Pan United has leveraged its R&D capabilities to develop more than 300 specialised concrete products since 2012.
- We expect increased demand for higher grade concrete in Singapore driven by
- larger and more complex projects, and
- greener buildings. PanU has also self-developed an in-house digital logistics platform Artificial Intelligence for RMC (AiR), which helped yield cost savings by streamlining operations and cutting manpower wastage.
- Given Pan United’s strong cash-generating capabilities and net cash position, we believe that a 5.4% dividend yield is sustainable (FY22-24F dividend of S$0.021-S$0.023). Our target price of S$0.56 for Pan United is pegged to 6.6x FY23F EV/EBITDA, based on a ~10% discount to peers.
Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.
Kenneth TAN CGS-CIMB Research | ONG Khang Chuen CFA CGS-CIMB Research | https://www.cgs-cimb.com 2022-03-29 2022-03-29
Read also CGS-CIMB's most recent report:
2022-04-06 Pan-United Corporation - A Visit To The Innovation & Command Centre
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