Pan-United Corporation - Riding The Construction Rebound
- Pan-United (SGX:P52) reported 1H22 net profit of S$13m (+15% h-o-h, +94% y-o-y). This beat our expectations at 55% of our full-year forecast and 42% of Bloomberg consensus. The beat was due to better-than-expected ready-mix concrete (RMC) EBITDA margin of 9.4% in 1H22 (vs. 1H21: 9.1%) driven by better profit spreads.
- Operating expenses remained well-handled despite higher staff expenses (+25% y-o-y) and utilities (+20% y-o-y).
- Pan-United proposed a S$0.005 interim dividend for 1H22 (same as 1H21).
- 1H22 construction output in Singapore rose 10% y-o-y to S$13.9bn. In addition, RMC prices have sharply risen year-to-date, with ASPs rising 24% y-o-y in Jun 22.
- Management also highlighted that while new workers are coming in, productivity was not as high as pre-pandemic levels yet.
- While rising opex will continue to be a concern, we believe that Pan-United has been successful in passing on these costs to preserve its margins. Pan-United also mentioned that its technology investments have helped to mitigate rising cost pressures.
- We raise our FY22-24F earnings per share (EPS) forecast for Pan-United by 9-13% as we factor in higher margin assumptions.
- Tailwinds still intact; reiterate ADD call on Pan-United with a higher target price of S$0.57, still based on 6.6x FY23F EV/EBITDA, based on a ~10% size 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 2022-08-04 2022-08-04
Previous report by CGS-CIMB:
2022-04-06 Pan-United Corporation - A Visit To The Innovation & Command Centre
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