Pan United Corporation

[weijian]

The downturn in RMC prices in Spore has been deep and long, similar to that of global oil prices. In this period, PanUnited's local market share has increased from ~30% to 40% (achieved during the 2016-2017 trough of RMC prices). RMC has been running at slightly above 100 bucks since 2H21. Looking at the historical annual prices of RMC, it is the highest in the last 7 years. Is there a better sign of things to come?

BCA expects 2022 construction demand between S$27b and S$32b, supported by public sector projects

Currently, ready-mixed concrete demand is expected to increase to between 12.5 million and 14 million cubic metres, from 11.6 million cubic metres in 2021. Demand for precast concrete is also projected to rise to between 1.6 million and 1.8 million cubic metres, up from 1.1 million cubic metres in 2021, while steel rebar demand is expected to climb to between 1 million and 1.2 million tonnes, up from 0.9 million tonnes last year.

https://www.businesstimes.com.sg/governm...-by-public

historical RMC annual avg prices: https://www.statista.com/statistics/9945...singapore/
BCA info: https://www1.bca.gov.sg/e-services/key-c...nformation

2 years ago, things were looking up for general construction and building materials but it subsequently proved to be a false start. 2022 RMC demand was projected to increase from 11.6mil to 12.5-14mil cubic metres but 2022 eventually turned out comparable to 2021.

In 2023, RMC demand was 12.25bil and 2024 forecast is expected to be 12-13mil cubic metres. Will this commodity provider finally take off again after the false start?

- A modest +30% NP YoY improvement. If excluding the coal bonzana of FY22 (10% associate), its RMC ops would have ~+40% NP YoY improvement.

- As a % of FCF, dividend payout ratio is only ~30% of FCF since FY19 (last 5 years). Working capital (receivables/payables/inventory) has largely been unchanged. Cash has largely been unchanged. The significant change to its balance sheet, has been a reduction in gearing from ~53% (107mil) to current 9% (21mil).

- The current gearing looks to be comfortable and with BCA projecting robust demand in the years ahead, would we be expecting the Ngs to continue to increase dividend in coming years? (even though it has already hiked FY23 dividend by 30%)

PanUnited FY23:
https://links.sgx.com/FileOpen/PUC_FY202...eID=786302

[weijian]

It's great that the CAPEX is spent by your regulator/landlord to help you to save costs. But will any cost savings immediately be competed away?

RMC (ready made concrete) is largely a commoditized product and is really cheap on weight basis. Since the Spore market is small, the RMC market here works on an efficient scale manner. YTL Cement's entry in 2014 coincided with the Spore construction industry starting its downturn 1 year later in 2015. Have the existing players learnt to "tiptoe at similar height" when watching the game in the stadium?

Jurong Port opens S$200 million shared-services hub for ready-mixed concrete

PORT operator Jurong Port (JP) on Wednesday (Nov 27) opened a S$200 million shared-services hub for ready-mixed concrete, which will enable construction companies to streamline logistics planning and cut costs.

The Ready-Mixed Concrete (RMC) Ecosystem facility, part of a planned Integrated Construction Park (ICP), offers services such as centralised recycling, truck washing and logistics planning. The system will improve storage capacity by 75 per cent, saving up to 8 hectares of land in the process, and cut more than a million truck trips.

Terence Seow, JP’s chief executive officer, said the port operator worked closely with various government agencies and industry partners “to collectively innovate, revamp and relocate a well-entrenched RMC supply chain to be adjacent to the waterfront”.

Spanning 11.9 hectares, the RMC facility has 11 aggregated plots. Six are used for common storage, while the remaining five are integrated with RMC plants. They are fully occupied by nine local companies, said JP.

https://www.businesstimes.com.sg/propert...d-concrete