To The Moon

$PAN-UNITED CORPORATION LTD(P52.SI)$

Otherwise known as Pan U, to those in sg construction industry. 

One of the most dominant if not the most dominant supplier of concrete in Singapore. 

Usually if we want to invest in building industry, it's usually 

1. Developers (capitaland, $CITY DEVELOPMENTS LIMITED(C09.SI)$)

2. Contractors/builders ($CHIP ENG SENG CORPORATION LTD(C29.SI)$$KOH BROTHERS GROUP LIMITED(K75.SI)$)

3. Suppliers ($HAFARY HOLDINGS LIMITED(5VS.SI)$)

4. Supporting industries like centurion 

Let's break down a bit on the diff.

1. Developers:

Developers initiate the projects initially, theyget money either when they sell off the completed properties (eg. Completed private residential projects) or they may manage and collect fees from completed projects (Eg. Shopping malls like capital land).

As such, they are involved in both front and back of building cycle.

Advantages are that they can collect money upfront and roll their capital faster.

Disadvantages are that if property markets crash, they will be bag holding. And Sg Govt will have a happy time taxing them. 

2. Contractors/builders 

They are the ones who are handling the physical construction works and to handover finally back to developers.

Advantages is that will have high pricing power during "good times"

Disadvantages are that when markets are bad... Guess who is stuck holding the bag afterthe damage from pandemic? 

https://www.todayonline.com/singapore/construction-manpower-woes-borders-reopening-1896981

Eh, it is known within the construction industry to not invest in builders/contractors.

If u think that u know better than those in the industries.... the builders/contractors doesneed ur support. [Facepalm] 

3. Suppliers 

Investing in suppliers is more predictable if u want to invest in construction sector without getting mixed up with real estate sector.

Advantage is controlled exposure to construction sector. If u choose companies that aremarket leaders, u will also have pricing power.

Disadvantage is that when the industry tanks, suppliers will also get hit. 

Guess that's about it for intro, let's get into Pan u itself.

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Concrete supply is still one of the most important materials for construction materials.

Although there are a few players in the markets, none Is as dominant as pan u.

Let's talk about short term (next 3 years).

Within the short term, immediate issue is disruption to construction sector due to supply chain issues which leads to inflation.

Can pan u pass down the cost to their clients? 

To answer that, do U know that pan u and other concrete suppliers does adjust their concrete pricing according to "supply of raw materials"? 

Eg. When material is in short supply, concrete suppliers raise prices in tandem. Similar tohow pump prices change when oil prices go up. 

Another issue, is the pace of growth of construction industry.

To answer that, refer to this:

https://www.businesswire.com/news/home/20220217005474/en/Singapore-Construction-Industry-Market-Size-Forecast-Q1-2022-by-Value-and-Volume-Across-40-Market-Segments-in-Residential-Commercial-Industrial-Institutional-and-Infrastructure-Construction---ResearchAndMarkets.com

https://www.channelnewsasia.com/singapore/hdb-launch-23000-new-bto-flats-2022-2023-2383231

Singapore construction industry is expected to grow during these few years.

In addition, if there's a real risk of recession,sg Govt, will likely pump more funds into construction sector to build more infrastructure and/or buildings as the money will circulate within The economy.

Let's look into the future of construction industry, does pan u have what it takes to continue the lead? 

If u read pan u annual report, u will realise that pan u has a vision for tomorrow.

Pan u is already pushing towards reduction of Carbon footprint, with substainable concrete.

If pan u can continue to push through substainable concrete and reduce carbon footprint for construction industry, it is highly likely to maintain and grow their profits and revenues.

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Let's talk about pan u share price.

Based on valuation metrics, pan u isn't exactly cheap. But we do have to consider that although they have pricing power, when the whole industry slows to a crawl, they were similarly crawling during pandemic lock-downand slow down. 

Now that sg construction industry is opening up and more projects are in the pipeline, I do foresee that pan u will have upside from current price.

As such, I would like to recommend Pan U to tiger friends to consider as potential acquisition. [Cool] [Cool] [Cool] 

@TigerStars@CaptainTiger