Is Now the Time to Put Pan-United (SGX:P52) on Your Watchlist?

Pan-United Corporation (SGX:P52), a global leader in low-carbon concrete technologies, has been making waves in the concrete industry with its commitment to sustainability and innovation. As investors look for companies that align with their values and offer growth potential, Pan-United has emerged as a strong contender. Let's explore why now might be the right time to put Pan-United on your watchlist.

1. Sustainability Leadership: Pan-United has consistently demonstrated its commitment to sustainability, making it a standout in the concrete industry. The company was the first in Singapore to attain the highest "Leader" certification for green products from the Singapore Green Building Council (SGBC) in 2017 and received the SGBC-BCA Sustainability Leadership Award in 2019. Pan-United's pledge to offer only low-carbon concrete by 2030, offer carbon-neutral concrete by 2040, and become a carbon-neutral company by 2050 further solidifies its position as a leader in sustainable building materials.
2. Growing Demand for Low-Carbon Concrete: As the construction industry becomes more conscious of its environmental impact, the demand for low-carbon concrete solutions is on the rise. Pan-United's extensive range of over 300 concrete solutions, with more than half being low-carbon concrete types, caters to this growing demand. The company's low-carbon concrete solutions have been used in numerous iconic buildings and infrastructure projects in Singapore, such as Jewel Changi, Gardens by the Bay, CapitaSpring, and many others.
3. Strong Construction Pipeline and Market Demand: Pan-United's strong construction pipeline and market demand in Singapore and the region are key drivers of its growth trajectory. The company is the largest domestic ready-mix concrete supplier in Singapore, with a 40% market share, and has operations in Malaysia, Vietnam, and Indonesia. Backed by an increasing number of public and private infrastructure projects, Pan-United is a strong proxy to Singapore's growing construction demand.
4. Innovation and Digital Solutions: Pan-United's transformation into a technology company with deep domain knowledge and advanced digital capabilities has enabled it to stay ahead of the sustainability curve. The company's in-house developed AI solution, AiR Digital, optimizes industrial supply chain operations for businesses in the ready-mix concrete and logistics space. This not only enhances Pan-United's competitiveness but also provides a stable revenue base.
5. Financial Performance and Growth Prospects: Pan-United's financial performance has been robust, with revenue increasing by 10.05% in 2023 compared to the previous year, reaching 774.83 million. Earnings also grew by 46.88% in 2023. Analysts expect Pan-United's core earnings to grow by 18-26% from 2024 to 2026, driven by strong demand for cement and concrete. The company's dividend payout ratio has been stable, with a dividend yield of around 5.52%.
6. Valuation and Investment Thesis: Pan-United's stock is currently trading at around S$0.54, which is a significant discount to its estimated fair value. The company's forward P/E ratio is around 8.40, and its EV/EBITDA ratio is around 7.35, indicating that it is undervalued compared to its peers. Investors who believe in the long-term growth potential of the low-carbon concrete market and Pan-United's leadership position may find the current valuation attractive.

In conclusion, Pan-United Corporation (SGX:P52) offers a compelling investment case with its strong focus on sustainability, growing demand for low-carbon concrete, robust financial performance, and attractive valuation. As investors seek companies that align with their values and offer growth potential, Pan-United should be on their watchlist. However, as with any investment, it is essential to conduct thorough research and consider your risk tolerance before making a decision.