CGS International

May 26, 2025

Pan-United Corp Ltd: Riding the Construction Tailwinds with Volume Growth and Low-Carbon Concrete

Investment Summary

• FY26F-28F revenue growth is expected to be supported by higher institutional & civil engineering construction demand in 2025F (c.50% of 2025F demand vs. 42% in 2024). [[1]]
• Pan-United Corp Ltd (PANU) is well-positioned to benefit from Singapore’s ongoing infrastructure upgrades due to its strength in institutional and civil engineering projects. [[1]]
• The report reiterates an Add rating on PANU, citing its strong positioning to capitalize on construction tailwinds. [[1]]

Higher Construction Demand Forecast

• The Building and Construction Authority (BCA) forecasts total construction demand to range between S\$47bn-53bn in 2025F, a 6-20% year-over-year increase compared to S\$44bn in 2024. Demand is expected to remain elevated at S\$39bn-46bn per year from 2026F-29F. [[1]]
• Institutional and civil engineering projects are anticipated to account for approximately 52% of BCA’s 2025 forecasted construction demand, up from 42% in 2024. [[1]]
• PANU’s expertise in civil engineering and institutional projects positions it favorably to capitalize on this demand, as these projects typically require specialized concrete blends with higher margins. [[1]]-[[2]]

Beneficiary of National Infrastructure Upgrading

• The Land Transport Authority (LTA) announced feasibility studies for two new rail lines – the Seletar and Tengah Line – as part of the Land Transport Master Plan 2040. [[2]]
• A feasibility study for the West Coast Extension (WCE) will connect the Jurong Regional Line (JRL) to the Cross Island Line (CRL) and Circle Line (CCL). [[2]]
• If confirmed, these initiatives could extend civil engineering construction demand visibility until early-2040F. [[2]]

Low-Carbon Concrete Utilization

• PANU began offering low-carbon concrete in 2019, ahead of its Singaporean peers, and continues to invest in research & development to expand its range of low-carbon concrete solutions. [[2]]
• Low-carbon solutions accounted for more than 50% of its 2024 sales volume. [[3]]
• PANU’s proprietary carbon mineralized concrete (PanU CMC+) has been used in notable projects such as Tuas Port, LTA’s North-South Corridor, and Cross Island Line, among others. [[3]]

Revised Target Price and Recommendation

• The target price (TP) is raised to S\$0.82, based on a higher FY26F EBITDA and an EV/EBITDA of 5.8x (its 2012-14 average during Singapore’s previous construction upcycle). [[3]]
• The Add rating is reiterated due to PANU’s strong positioning to capture construction tailwinds, supported by an improved balance sheet. [[3]]
• Potential re-rating catalysts include strong industry volume growth and sustained margin strength. [[3]]
• Downside risks include counterparty credit risks and a slowdown in project offtake volumes impacting RMC sales and margins. [[3]]

Company Overview

• Rating: ADD (no change) [[3]]
• Consensus Ratings: Buy 3, Hold 0, Sell 0 [[3]]
• Current Price: S\$0.705 [[3]]
• Target Price: S\$0.823 [[3]]
• Previous Target: S\$0.75 [[3]]
• Up/Downside: 16.7% [[3]]
• Market Cap: US\$382.8m / S\$492.1m [[3]]
• Average Daily Turnover: US\$0.18m / S\$0.24m [[3]]
• Current Shares O/S: 698.4m [[3]]
• Free Float: 26.1% [[3]]

Key Changes in This Note

• FY26-27F core EPS raised by 12-19% on higher sales volume estimates. [[3]]
• This note also denotes a change of analyst coverage. [[3]]

Price Performance

• 1M: Absolute (%) 11.0, Relative (%) 5.1 [[3]]
• 3M: Absolute (%) 15.6, Relative (%) 12.1 [[3]]
• 12M: Absolute (%) 58.4, Relative (%) 27.5 [[3]]

Major Shareholders

• Ng family: 60.0% [[3]]
• Dimensional Fund Advisors: 0.4% [[3]]
• Lee Cheong Seng: 0.4% [[3]]

Analyst(s)

• Natalie ONG [[3]]
• LIM Siew Khee [[3]]

Financial Summary

Construction Contracts and Output

• 1Q25 construction contracts awarded surged 46% yoy. [[2]]
• Monthly construction output increased by 9% yoy in 1Q25. [[2]]

Construction Demand Breakdown

Rail Line Development

• Feasibility studies are ongoing for the Seletar and Tengah Line. [[3]]
• The Seletar Line could serve areas such as Woodlands, Sembawang, Sengkang West, Serangoon North, Whampoa, Kallang, and the Greater Southern Waterfront. [[3]]
• The Tengah line could serve the west and northwest regions such as Tengah, Bukit Batok, Queensway, and Bukit Merah. [[3]]
• A two-phase West Coast Extension (WCE) is being studied to improve rail connectivity, connecting the Jurong Regional Line (JRL) to the Cross Island Line (CRL) and Circle Line (CCL) by late-2030s and early-2040s, respectively. [[3]]
• These initiatives align with the Land Transport Master Plan 2040, aiming to reduce peak-period journeys between homes and workplaces to below 45 minutes. [[3]]
• The LTA expects to complete these lines in phases from 2040 onwards, potentially extending visibility for engineering construction demand. [[3]]

Ongoing Rail Projects (2023-2032F)

Earnings Revision

Peers Comparison

ESG Analysis

• Pan-United Corp (PanU) has demonstrated a commitment to environmental sustainability efforts and is the largest sustainable ready-mix concrete (RMC) supplier in Singapore. [[6]]
• Since 2017, PanU has increased its portfolio of sustainable concrete offerings and ramped up the usage of low-carbon raw materials, aiming to offer only low-carbon concrete products by 2030. [[6]]

ESG Highlights

• PanU is a leading provider of greener concrete products in Singapore, utilizing carbon capture, utilization, and sequestration (CCUS) technologies since 2018. [[6]]
• PanU has been conferred the “Leader” certification, the highest level of sustainability certification, from the Singapore Green Building Council (SGBC). [[6]]
• The group has set goals to offer only low-carbon concrete by 2030, carbon-neutral concrete by 2040, and become a carbon-neutral company by 2050. [[6]]

ESG Trends

• Since 2017, PanU has increased its usage of lower-carbon inputs, such as ground granulated blast-furnace slag, superfluous concrete, and washed copper slag. [[6]]
• In 2018, the group partnered with CarbonCure to use its technology in RMC production, integrating it into three batching plants by end-2020. [[6]]
• In Dec 2022, PanU became the first concrete company in Asia to provide on-demand Environmental Product Declaration certificates (EPDs). [[6]]

Financial Ratios and Key Drivers