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APAC Realty

Apac Realty&rsquo s ERA losing agents to PropNex: media report

OF THE more than 700 property agents who left Apac Realty&rsquo s : CLN 0% ERA in 2022, at least 640 joined rival real estate company PropNex Realty : OYY -0.62%, according to a Straits Times report citing data from Huttons Asia. In comparison, 209 agents moved from PropNex to ERA.

Most real estate agents switch agencies during Council for Estate Agencies&rsquo (CEA) yearly real estate salesperson registration renewal exercise, which takes place from Oct 1 to Nov 30.

PropNex Realty continues to be the largest agency in Singapore, boasting over 12,060 salespersons as at Wednesday (Nov 23), compared to 10,761 as at Jan 1, 2022, according to data from the CEA portal. ERA Realty, in second place, now employs close to 8,500 agents. Rounding out the top five agencies by number of agents are Huttons Asia, with some 4,700 agents OrangeTee & Tie, with about 3,220 and SRI, with over 1,230.

On Nov 9, PropNex reported a net profit of S$17.6 million in Q3 2022, marking a 21.9 per cent increase from S$14.4 million in the year-ago period, on the back of higher revenue. Its revenue rose 10.2 per cent over the same period to S$258.4 million.

For the nine-month period ended Sep 30, it posted a revenue of S$730.8 million, up 2.1 per cent on the year, while net profit fell to S$44.6 million, down 2.5 per cent.

For the same nine-month period, Apac Realty, which holds the ERA regional master franchise rights, posted a $23.9 million net profit, down 8.5 per cent from the same period in 2021. According to a Nov 9 business update, its total revenue for the three quarters also fell year on year, down 3 per cent to S$527.5 million.

The decline was largely due to a 4.8 per cent year-on-year drop in resale and rental brokerage revenue to S$310.2 million from S$325.7 million, it said.

Cooling measures to weigh on APAC Realty for two quarters: DBS

APAC Realty is adapting to property cooling measures, with 9MFY2022 ended September results above expectations, writes DBS Group Research analyst Ling Lee Keng.

In a Nov 11 note, Ling is upgrading APAC Realty to &ldquo hold&rdquo from &ldquo fully valued&rdquo , with a higher target price of 59 cents from 41 cents previously. The new target price represents an upside of 6% against the traded price of 56 cents on Nov 10.

Total revenue for 9MFY2022 was down 3.2% y-o-y to $523.9 million. Despite the 43% y-o-y drop in units sold for the new home segment, revenue only saw a 0.6% decline to $210.1 million, mainly due to the higher selling prices. Resale and rental revenue eased 4.8% y-o-y to $310.2 million.

For 3QFY2022, revenue was up 1.5% y-o-y and 5.7% q-o-q.

Meanwhile, 9MFY2022 net profit declined 8.5% to $23.9 million, above expectations. 9MFY2022 net profit declined 8.5% y-o-y to $23.9 million, on the back of lower revenue and net margins of 4.6% compared to 4.8% in FY2021.

Net margin for 3QFY2022 dropped to 4% compared to 4.5% in 2QFY2022 and 5.1% in 3QFY2021, mainly due to higher marketing-related expenses post the reopening of the economy.

Knee-jerk reaction to last two quarters

Ling points to the &ldquo resilient&rdquo property market, supported by a strong pipeline of new launches, stable prices and demand.

&ldquo The knee-jerk reaction to the latest round of cooling measures introduced on Sept 30 is expected to last one to two quarters,&rdquo says Ling. &ldquo [This is] similar to the previous rounds of measures in 2018 and 2021, based on the Private Property Price Index performance.&rdquo

Hence, APAC Realty could see a weaker 4QFY2022 and 1QFY2023. &ldquo Overall, the property market is expected to remain resilient in 2023, supported by the strong pipeline of new launches and resilient demand from both locals and foreigners. The pace of the price increase, however, could be muted given the macro headwinds including rising inflation and slower economic growth,&rdquo writes Ling.

Looking at history, the knee-jerk period for the cooling measures implemented in 2013 was about four years, notes Ling. &ldquo Notably, net profit for APAC only managed to reach the pre-measure level in 2017&hellip Based on historical records, net profit for APAC Realty declined by about 30% to 40% following the implementation of major cooling measures, but the rebound in the subsequent years was also strong.&rdquo

ERA market share falls

Ling notes a slight drop in overall market share by APAC Realty&rsquo s agency ERA. &ldquo ERA&rsquo s overall market share eased slightly to 40.1% compared to 40.2% for 9MFY2021. New home and private resale segments were weaker while the HDB resale and leasing divisions were stable.&rdquo

Ling points to more new home supply in the pipeline for 2023. &ldquo ERA has secured marketing mandates for 13 projects with a total of 3,642 units launched so far. Another two more projects &mdash Hill House and Tenet &mdash with a total of 690 units are expected to be launched in 2022. For 2023, more than 24 projects with a total of more than 8,000 units are expected to be launched.&rdquo

Ling is now projecting new home sales of 8,500/9,000/9,500 units for FY2022/FY2023/FY2024. &ldquo For the private resale segment, we project 14,000/13,000/15,000 for FY2022/FY2023/FY2024. Projection for HDB resale transactions has also been adjusted to 28,000/26,000/27,000 units for FY2022/FY2023/FY2024.&rdquo

Apac Realty posts 8.5% fall in 9M earnings to S$23.9 million

REAL estate services provider Apac Realty : CLN 0% on Wednesday (Nov 9) reported earnings of S$23.9 million for the first nine months ended Sep 30, down 8.5 per cent from S$26.1 million in the year-ago period.

Total revenue for the first three quarters of the year fell 3 per cent year on year to S$527.5 million from S$543.8 million, said the company, which holds the ERA regional master franchise rights, in a business update.

The decline was largely due to a 4.8 per cent year-on-year drop in resale and rental brokerage revenue to S$310.2 million from S$325.7 million.

New home brokerage revenue slipped 0.6 per cent to S$210.1 million from S$211.3 million in the year-ago period.

Its market share of all residential transactions, excluding rentals, under the ERA brand stood at 40.1 per cent as at end-September, not much different from the 40.2 per cent in the corresponding period last year.

APAC Realty sees ' muted outlook ahead' amid new property cooling measures: RHB

RHB Group Research analyst Vijay Natarajan has kept a &ldquo neutral&rdquo rating on APAC Realty with a lowered target price of 60 cents from 75 cents as he sees a &ldquo muted outlook ahead&rdquo for the property agency.

The analyst previously downgraded the counter&rsquo s call to &ldquo neutral&rdquo from &ldquo buy&rdquo in his Aug 11 report.

In an Oct 18 report, Natarajan notes that the recent imposition of additional cooling measures and a sharp rising interest rates environment have since dampened the outlook of Singapore&rsquo s real estate sector. As a result, the analyst expects transaction volumes to slow down even more, particularly in the resale market.

&ldquo This should impact earnings which we expect to decline 11% in FY2023 (ending December 2023),&rdquo writes Natarajan, though acknowledging that APAC Realty&rsquo s net cash position continues to be good with a decent yield of around 8%.

On the back of his lower target price, the analyst has also lowered his net profit estimates for the FY2023-FY2024 by approximately 15%, factoring in a slower volume growth, particularly in the resale market segment which accounts for around 55% of APAC Realty&rsquo s total revenue.

&ldquo In the discounted cash flow (DCF) model, factoring in current market conditions, we also raise our cost of equity assumption by 100 basis points (bps), which results in a lower target price,&rdquo Natarajan explains.

Natarajan also expects that new home sales for the full year are likely to come in at the lower end of his expectations of 8,000 to 9,000 units. In addition, overall resale transactions for this year are expected to decline by 15% to 20%, considering the sharp slowdown of resale transactions under the Housing & Development Board (HDB) in 4Q2022.

&ldquo For 2023, we expect flattish new home sales and factored in a 10% decline in resale market transactions,&rdquo he adds.

The analyst however notes that the company has gradually been building its regional presence, with APAC Realty announcing the purchase of an additional 79.74% stake in ERA Indonesia from Realti Indo Mandiri for a consideration of INR92 billion ($8.5 million) raising its total stake in the listed subsidiary to 85%. The purchase price of INR122 per share is at an approximate 2% discount to the latest closing price of INR125.

In light of a change of control arising from the transaction, APAC Realty has launched a mandatory tender offer at the same price for the remaining 15% shares, which will close on Nov 16 and also stated its intention to keep the entity listed.

In FY2021, ERA Indonesia&rsquo s net profit was INR3.9 billion, based on which the transaction implies a P/E of 30x which Natarajan believes is justifiable considering the massive untapped future growth potential.

To recap, ERA Indonesia holds the ERA country master franchise for Indonesia. As at Sept 30, it had 111 active member broker offices in the major cities of Indonesia with 4,478 agents.

The overall earnings contribution from ERA Indonesia, assuming an 85% stake, continues to be very small at around 1% of total, notes Natarajan. The transaction will be fully funded from internal cash.

Aside from Indonesia, APAC Realty has also been building its presence in Vietnam and Thailand markets with a view on long-term growth.

From DBS 3rd Oct

APAC Realty

Hit by fresh cooling measures

Impacted by another round of cooling measures cut FY22/23F transaction assumptions by 4% to 30%
Impact on APAC&rsquo s profitability was short-lived in the past but expect a prolonged impact this time round
Expect only slight recovery in earnings in 2024
Cut FY22/23F earnings by 9% and 42%, downgrade to FULLY VALUED with lower TP of S$0.41

Looking at the latest report from property sector, the price up trend is still intact, maybe at a slower pace. In land scarcity Singapore, property is always the hot spot. Now with no covid restrictions, Hot cash rich foreigners especially from China are snapping up properties here like no tomorrow.
Just watch for APAC & PropNex, they will be shining Stars!
Dyodd.

Before financial year end, these so call institutions will upgrade APAC again, now they downgrade so that they can buy in cheaper from retailers, when it is time, they will upgrade and sell high to retailers.
Just see these reports as a reference, no need to care what they say. We do not know what will happen going forward.

Joelton ( Date: 12-Aug-2022 09:41) Posted:

RHB downgrades Apac Realty to &lsquo neutral&rsquo , expects 50% drop in H2 net profit

RHB has downgraded Apac Realty : CLN +0.71% to &ldquo neutral&rdquo from &ldquo buy&rdquo with an unchanged target price of S$0.75, following the release of the real estate services provider&rsquo s results for the first half of the fiscal year.

The brokerage&rsquo s move comes despite noting a strong set of H1 results, as it anticipates a 50 per cent drop in H2 net profit on the back of lower transaction volumes, due to limited new launch inventory and rising interest rates.

In a report on Thursday (Aug 11), analyst Vijay Natarajan said he expects a 30-40 per cent decline in new sales transaction volumes to have a more prominent impact on Apac Realty&rsquo s profits for the second half of the fiscal year. This is because income recognition of new launches - one of the group&rsquo s key profit drivers - comes with a typical time lag of 2-6 months, he said.

Transaction volumes in the secondary real estate market are further projected to fall by 10-15 per cent.

The analyst has nonetheless raised FY2022 to FY2023 net profit estimates by 1-2 per cent after tweaking volume assumptions, but expects the stock to trade more range bound in the near term from the lack of strong catalysts.

Other than &ldquo lukewarm&rdquo contributions from Apac Realty&rsquo s overseas businesses, Natarajan also notes a slight decline in the company&rsquo s overall market share amid increased industry competition and the recent recruitment of more new agents.

&ldquo Real estate agency ERA&rsquo s estimated market share in the new sale segment dipped slightly to 30.6 per cent (versus 32.3 per cent in H1 FY2021) and private resale market stood at 41.9 per cent (versus 43.8 per cent),&rdquo observed the analyst.

&ldquo The company is implementing a host of new strategies, including providing more training and beefing up its tech tools to help raise productivity of its agents as well as to retain and attract agents,&rdquo he added.