Pan-United - Strong 2H25 earnings growth with higher dividend

2H25 revenue grew 16% year-on-year

Pan-United reported a strong set of 2H25 results with revenue increasing 16% year-on-year to S$497.3 million, while profit attributable to shareholders increased 35% to S$30.1 million. Pan-United proposed higher final dividend of S$0.035 per share (up from S$0.023 in FY24) lifting total FY25 ordinary dividends to S$0.045 per share, versus S$0.03 cents in FY24.

EBITDA margins continue to expand

EBITDA margin expanded to 11.7% in 2H25 from 9.4% in 2H24, reflecting a meaningful improvement in operating profitability. Management attributed the stronger margin performance to a combination of a better sales mix, a firmer market environment with healthier project pipelines, and the benefits of the group’s vertically integrated upstream model. Management also highlighted efficiency gains from its technology investments, particularly in back-end systems and logistics coordination with subcontractors and transport partners.

Balance sheet strengthened with a stronger net cash position

Pan-United ended FY25 with a solid balance sheet and maintained a net cash position (including lease liabilities), despite elevated capex. Gross borrowings (excluding lease liabilities) declined to S$10.5 million from S$15.4 million, while the company continued to invest in capacity and facility upgrades.

AiR Digital improving revenue quality

AiR Digital is still small today, but it is strategically important as a potential driver of better earnings quality over time. The platform, originally built to optimize Pan-United’s own operations, is now being commercialised externally and could add a more recurring, subscription-like income stream with better visibility and stickier customer relationships. Over time, this should help improve revenue mix resilience alongside the group’s core concrete business.

Supportive construction outlook

According to BCA projections, total construction demand is expected to reach between S$47 billion and S$53 billion in 2026 in nominal terms, and to average S$39–46 billion per year from 2027 to 2030 in constant prices. Total demand for ready-mix concrete in Singapore is projected to rise to between 15.0 million and 16.0 million m³ in 2026, up from approximately 14.53 million m³ in 2025. 

Maintain BUY with higher target price of S$1.49

We roll forward our valuation and raise our target price to S$1.49 (from S$1.26), given Pan-United’s stronger earnings momentum, margin expansion, and resilient cash generation, implying 17.3% upside from 25 Feb closing of S$1.27.  At S$1.49, this would imply 17.9x 2026 P/E and 3.5% forward dividend yield. We maintain our BUY rating.

Key Risks

Key risks include construction-sector cyclicality, exposure to raw-material and energy cost inflation, competition from regional RMC suppliers, delays in major public projects, and slower-than-expected adoption of PanU’s digital solutions.

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