+ Volume picked up from May despite the lull in the first four months, with the clampdown on construction work for safety checks. 1H23 volume was flat YoY.
+ Gross margin rose 1.6ppt to 21.3%. We think the improvement was derived from a better product mix as it sold more differentiated products such as those which offer low-carbon solutions, and higher fee income from batching services.
+ Net cash increased to S$18mn (Dec 22: S$10mn). Cash generation remains strong, with free cash flow of S$0.03/share. Receivable days have risen to 85 days (Dec22: 72 days) mainly due to the higher volume ramp-up at quarter end. While credit risk of the construction industry has risen, we think the impact on PanU is small as it supplies mainly to infrastructure projects.
– Malaysia and Vietnam markets remained weak.