For its 1HFY2025 ended June, revenue rose 4.3% y-o-y to $401.1 million, supported by higher RMC volumes. Net profit grew 11% y-o-y to $20.6 million, despite foreign exchange (forex) losses and higher depreciation while gross margins expanded 2.8 percentage points (ppts) to 24.4%, underpinned by upstream integration and operational efficiencies.
“Its AiR Digital logistics platform, which optimises fleet productivity and reduces idle time, has been instrumental in sustaining margin gains even amid rising manpower and rental costs,” writes Mo.
Thus far, Pan-United has secured $430 million worth of ready-mix supply contracts for Changi Airport Terminal 5, which will span five years. This, Mo notes, will enhance earnings visibility and is a reflection of its ability to capture marquee infrastructure works.
The group is also engaged across a wide spectrum of projects, including public housing launches, healthcare facilities, mixed-use developments and MRT expansions. Mo writes: “With its scale and entrenched customer relationships, Pan-United remains the preferred partner for both public and private sector developers.”
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In a bid to capture rising demand, Pan-United is investing heavily in capacity, with a capital expenditure (capex) of around $60 million planned in 2025 for its new Jurong Port Integrated Construction Park batching plant, slated to begin operations by the end of 2025 or in early 2026.
The analyst notes that this “state-of-the-art” facility is expected to boost supply reliability, enhance cost efficiency and raise barriers to entry in the local RMC market.
With Singapore’s Building and Construction Authority (BCA) forecasting some $47 billion to $53 billion of contracts to be awarded in 2025, up from $44.2 billion in 2024, RMC demand is projected at 13.0 million to 14.5 million cubic metres this year, which is “broadly flat” to “moderately higher” y-o-y.
Mo writes: “Growth will be led by public sector infrastructure, which now accounts for about 60% of total demand. Major projects such as Changi T5, MRT lines, healthcare campuses, and an accelerated housing programme underpin a multi-year uptrend in construction volumes, from which Pan-United stands to benefit.”
The group is also strong in its balance sheet, with a net cash position of $69.8 million as at 1HFY2025, giving it “ample capacity” to fund expansion while rewarding shareholders. For the period, Pan-United declared a 43% higher interim dividend of 1.0 cents per share, to which Mo notes continues a “multi-year trend” of dividend growth.
“With strong cash generation, low gearing, and industry leadership in sustainable concrete solutions, Pan-United is well-positioned to continue delivering steady shareholder returns,” adds the analyst.
Her revised valuation is rolled forward to FY2026 and is based on 17 times FY2026 price-to-earnings ratio (P/E), representing a 16% premium to regional peers’ average of 14.6 times. She writes: “We believe this premium is warranted given Pan-United’s superior profitability and return on equity (ROE) of 18%, backed by its dominant market share and resilient margins.
“The stock is currently trading at 14 times FY2026 P/E, offering upside potential as it continues to benefit from Singapore’s infrastructure upcycle and its market leadership in low carbon concrete,” concludes Mo.
She has trimmed her FY2025, FY2026 and FY2026 earnings forecasts by 10%, 11% and 16% respectively, after refining our margin assumptions.
Share price catalysts noted by her include earnings-accretive acquisitions, better-than-expected number of infrastructure projects awarded, or higher-than-expected dividends.
Pan-United closed at $1.25 on Sept 11, up 5.93%.
