Pan-United Corporation "Concrete upside as Singapore builds" (Buy) Chur

Research evidence excerpt

Pan-United Corporation "Concrete upside as Singapore builds" (Buy) Chur

(S$)

analysis of prior cycles, BCA guidance, major projects pipeline and interviews with From To % ch Cons.

industry participants. Beyond the cyclical recovery, we see four structural tailwinds: 1) 12/26E - 0.08 - 0.09

demographic shifts supporting residential demand; 2) healthcare capacity expansion; 3) 12/27E - 0.09 - 0.10

coastal protection works, which could cost more than S$100bn over 50-100 years; and 12/28E - 0.10 - 0.11

4) capital-intensive transport infrastructure under the Land Transport Master Plan 2040.

Calvin Chur

Analyst

Sustainable margins despite cyclicality

calvin.chur@ubs.com

We view Pan-United’s 7% EBIT margin as sustainable versus construction peers like +65-6495 3992

contractors. The company has been profitable, unlike contractors that remain weighed

Michael Lim

down by pre-Covid priced projects even in 2025. This reflects three factors: 1)

Singapore’s ready-mixed concrete market is relatively consolidated, with rational michael-h.lim@ubs.com

competition; 2) contracts are typically structured on a floating basis, reducing margin +65-6495 5902

pressure during macro shocks; and 3) Pan-United’s scale, with c40% share, operating

know-how and physical infra (e.g. silos) create a durable moat around profitability.

Valuation: Initiate coverage with a Buy rating and S$1.63 price target

We value Pan-United using DCF, cross-checked against target P/E and P/B, to derive our

S$1.63 price target. Our reverse DCF suggests the market is pricing in a 5% 2025-28e

EPS CAGR, versus UBS estimates of 10%. We think investors are under-appreciating the

sustainability of the construction upcycle, the durability of Pan-United’s margins and

upside from operating leverage.