Pan United

Pan United: CIMB initiates at Outperform with TP $0.83. Says, from its humble beginnings, Pan United has grown into a building materials behemoth with diversified businesses in port logistics and shipping. Believes growth should stem from market share gains in the concrete segment in Spore and international expansion. Notes the local construction industry will be kept busy by a slew of upcoming private and public projects. Estimates avg construction output of $27-31b annually , translating into a potential mkt of $2.5b for the materials industry. Expects Pan United to galvanize its expertise in specialty concrete to entrench its mkt leadership in Spore. Adds, mgt has set its sights on exporting its concrete expertise to other SE Asian countries like Vietnam, which could raise Pan United’s growth potential in the longer term. Notes Pan United had consistently paid around 60% of its earnings in the past five years, and is currently dishing out 3.5 cts/sh of dividends. Thinks there is scope for it to increase its dividends, backed by its strong cashflow generation. Adds its share repurchase programme should also provide price support, limiting downside.