Pan-United 1H26: Strong 1H growth, longer runway, but valuation catches up

• Record first half, with margins widening alongside growth: 1H26 revenue rose 37% to a record SGD 549.6 million and net profit climbed 49%, lifting EBITDA margin to 11.1% from 10.2% and interim dividend by 50%.

• Digitalisation is complementing volume in driving profitability: Operating leverage and efficiency gains from proprietary AiR Digital complemented volume growth, with real-time optimisation of scheduling, fleet deployment and resource allocation supporting margin expansion.

• Public-sector infrastructure underpins a durable demand runway: BCA projects SGD 39–46 billion of annual construction demand over 2027–2030, while the Changi T5 ramp, which had yet to contribute in 1H26, adds another growth leg from 2H26.

• Pricing resilience and a longer-dated pipeline strengthen the outlook: Industry-wide RMC price adjustments provide protection against cost inflation, while the Paya Lebar Air Base redevelopment and reclamation projects extend the demand runway beyond 2030.

• HOLD, target price SGD 1.85: We raise our 2026–2028E EPS estimates and retain a 15x fair P/E on revised 2028E EPS, implying 8.6% upside from SGD 1.70; the stronger earnings trajectory supports the higher target price, while the recent re-rating brings valuation closer to fair value.

Company Update

1H26: Record revenue, with margins widening alongside growth

For the six months ended 30 June 2026, Pan-United’s revenue rose 37% year-on-year to a record SGD 549.6 million, led by its core Singapore market, where revenue increased 38.7% to SGD 485.9 million on resilient construction activity.

The strong top-line growth translated into faster earnings growth. EBITDA increased 48% to SGD 60.8 million from SGD 41.1 million a year earlier, lifting the EBITDA margin to 11.1% from 10.2%. Net profit attributable to shareholders rose 49% to SGD 30.6 million, while basic EPS increased to 4.38 cents from 2.95 cents. Reflecting the stronger earnings performance, the board raised its interim dividend by 50% to 1.5 cents.

Table 1: Pan-United 1H2026 financial summary

The margin expansion points to continued operating leverage and efficiency gains from Pan-United’s proprietary AiR Digital platform, an in-house AI system that optimises scheduling, fleet deployment and resource allocation in real time. Management attributed the earnings improvement to higher revenue and operational efficiencies, suggesting that digitalisation is increasingly complementing volume growth in driving profitability.

The Group remained in a net cash position at end-1H26, with net asset value per share of 42.3 cents. It also continued to return capital to shareholders, repurchasing 1,317,700 shares for SGD 1.94 million during the half.

Against this backdrop, the earnings improvement remained broad-based, although two cost pressures were evident beneath the headline numbers. Staff costs rose 43% year-on-year, outpacing revenue growth, as the Group increased headcount ahead of its Jurong capacity expansion. Meanwhile, the effective tax rate rose to 24.5% from 22.1%, reflecting a higher deferred-tax charge as accelerated capital allowances on the expanded asset base unwound. Neither materially altered the strong underlying earnings trajectory in 1H26.

Public-sector infrastructure underpins a durable demand runway through 2030

The more important question is whether this demand is durable, and the pipeline points to sustained construction activity beyond 2026. The Building and Construction Authority (BCA) projects total construction demand of SGD 39–46 billion per annum over 2027–2030, maintaining a structurally elevated level well above pre-COVID norms, following an expected SGD 47–53 billion in 2026.

Importantly for a ready-mixed concrete (RMC) producer, the most concrete-intensive segment is leading the cycle. Civil-engineering demand is forecast to reach a record SGD 11.6–13.4 billion in 2026, up from SGD 9.3 billion in 2025, while public-sector projects are expected to account for around 55% of total construction demand. This provides a more stable demand base than a predominantly private-sector cycle would imply.

The pipeline is also broad across the sectors most relevant to concrete consumption. Transport infrastructure includes the Cross Island Line and Jurong Region Line, both of which are under construction; healthcare projects include the new Tengah General and Community Hospital and the ongoing redevelopment of the National University Hospital; while climate-resilience infrastructure includes the Tuas Water Reclamation Plant under Deep Tunnel Sewerage System Phase 2 and the second phase of the Integrated Waste Management Facility.

Pan-United is also positioned to capture this demand through its secured project pipeline, with Changi T5 providing a significant near-term growth driver. Revenue recognition is expected to begin in 2H26 and ramp up over the multi-year construction period, with T5 identified as a key demand driver for both 2026 and the 2027–2030 medium term as further packages are progressively awarded. Pan-United’s 37% first-half revenue growth was therefore achieved before T5 began contributing, providing further support for the Group’s growth trajectory as the project ramps up. As Singapore’s RMC market leader, Pan-United is well positioned to benefit from the sustained public-sector construction pipeline.

Transparent, industry-wide pricing supports margin resilience

A recurring concern for materials producers is whether rising input and energy costs will erode margins. Pan-United’s 1H26 results provide some reassurance: margins widened despite an increase in staff costs and elevated energy prices, as higher costs were recovered through industry-wide RMC price adjustments rather than fully absorbed by producers. The mechanism is supported by pricing transparency, with the BCA publishing monthly market prices for ready-mixed concrete and other key construction materials. This provides a visible reference point for the industry, allowing price adjustments to be recognised as market-wide movements rather than supplier-specific increases.

Combined with Pan-United’s roughly 40% market share and the efficiency gains from AiR Digital, this pricing framework provides a degree of protection against cost inflation. As a result, higher input costs do not necessarily translate into margin compression, while operational efficiencies can provide further scope for margin expansion as volumes grow.

Beyond 2030: a longer-dated infrastructure runway

While the current construction outlook extends through 2030, Singapore’s longer-dated infrastructure and land-development pipeline provides visibility well beyond the BCA’s medium-term forecast horizon. This includes major redevelopment and reclamation projects that could support construction activity well into the 2030s and beyond.

Management highlighted the redevelopment of Paya Lebar Air Base, which is expected to free up around 800 hectares of land from the 2030s for a new town, beginning with the Defu neighbourhood and ultimately accommodating an estimated 150,000 homes. At the 2026 National Day Rally, Prime Minister Lawrence Wong also outlined a longer-term reclamation-led development agenda, including a new western island formed by merging several islands south of Jurong Island to accommodate new industries and power infrastructure, the Long Island development along the East Coast, and a feasibility study into undersea tunnels to Pulau Tekong.

These projects are particularly relevant to Pan-United given the heavy use of aggregates and concrete in land reclamation, infrastructure and large-scale development. While their contribution lies further ahead and remains subject to project timelines and execution, they extend the potential demand runway beyond the current construction cycle and reinforce the structural depth of Singapore’s infrastructure pipeline.

We incorporate the 1H26 actuals, the higher tax and staff-cost base, and the phasing of Changi T5 into our forecasts, raising our 2026–2028E EPS estimates. We retain our 15x fair P/E multiple, applied to revised 2028E EPS of 12.3 cents, which yields a target price of SGD 1.85, up from SGD 1.73. This implies 8.6% upside from the current price of SGD 1.70.

We move our rating to Hold from Accumulate. The stronger earnings trajectory supports the higher target price, while the structural drivers of digitalisation, pricing power and a multi-year public-sector pipeline remain intact. However, following the recent share-price increase, much of the valuation gap has narrowed, leaving relatively limited near-term upside. Investors who do not yet own a position may consider accumulating on share-price weakness for a more favourable entry point. Meanwhile, the approaching 3% forward dividend yield provides additional income support as investors await further earnings growth.

Table 2: Pan-United earnings forecasts

Figure 1: Pan-United share price vs earnings per share

iFAST Research rating system

Declaration:

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.

This research report is produced under the Grant for Equity Market Singapore (“GEMS”) Scheme. iFAST Financial Pte Ltd receives financial compensation for the preparation and publication of this report. For more information regarding the GEMS scheme and its objectives, please refer to this infographic. iFAST Financial Pte Ltd maintains editorial independence regarding the analysis and conclusions presented herein.