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PhillipCapital starts Pan-United Corporation at 'buy' on recovery in construction

Felicia Tan
Felicia Tan3/29/2021 4:58 PM GMT+08  • 3 min read
PhillipCapital starts Pan-United Corporation at 'buy' on recovery in construction
Pan-United's target price of 40 cents is based on the group's historical 10-year average of 7.8 times FY2021 EV/EBITDA.
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An expected recovery in the construction industry for 2021 has prompted PhillipCapital analyst Tan Jie Hui to initiate “buy” on Pan-United Corporation with a target price of 40 cents.

On the back of a disruption in the industry, which caused demand to drop 36% y-o-y in 2020 to $21.3 billion, the Building and Construction Authority (BCA) predicts that demand in 2021 will recover to between $23 billion and $28 billion.

“Ready-mixed concrete (RMC) volumes rebounded from almost 100% below their 10-year average at the start of 2020 to 14% below as at December 2020. The recovery was spearheaded by public residential and civil engineering projects,” writes Tan in a March 29 report, who expects Pan-United to benefit, as it is the market leader with a 40% share in the past five to six years.

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