Pan United

Pan United: UOBK maintains Buy with TP $1.25. The house is positive on Pan United’s recently completed the acquisition of an additional stake in Changshu Xinghua Port (CXP) – one of China’s top 10 ports that serves China’s fastest growing industrial regions, like Suzhou, Wuxi and Changshu, which enjoyed GDP growth in excess of 10% in 2012. Given its strategic location, CXP has been profitable for the last 12 yrs. Pan United’s 51% stake previously contributed steady net profits of $6.4m – 8.8m (16%-31% of Pan United’s net profit) over 2009-12. With Pan United having raised its effective interest in CXP to 85.5%, UOBK believes profit contribution from CXP should rise to $7.6m to $12.7m on an annualized basis. With greater control, Pan United should also enjoy higher flexibility in extracting value via dividends from CXP.