Listed on the mainboard of the SGX in 1993, Pan-United is the largest provider of ready-mixed concrete (RMC) and cement in Singapore, with a growing footprint in Vietnam, Malaysia and Indonesia. PanU commands about 40% of Singapore’s RMC production industry. It has two main business lines: concrete and cement at 95% of FY20 revenue; and trading and shipping, at 5%. Singapore generated 70% of its FY19 revenue.
We initiate coverage with a BUY rating. Our target price of S$0.40 is based on PanU’s historical 10-year average of 7.8x FY21e EV/EBITDA, excluding outliers in FY12 and FY17. PanU is trading at -1SD of its 10-year mean of 8.26x. Our TP implies a total potential return of 38.6%, inclusive of dividend yields of 3.0%.