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PropNex H1 profit falls 18.4% to S$22.1 million on lower commission income
PROPNEX : OYY +0.96% posted an 18.4 per cent drop in net profit to S$22.1 million for its first half year ended June, from S$27.0 million in the previous corresponding period. This came as the real estate services group&rsquo s revenue fell 22.9 per cent to S$364.3 million from S$472.3 million, mainly due to a decrease in commission income from both its agency services and project marketing services segments, it said on Thursday (Aug 10).
Commission income from agency services declined 13.3 per cent to S$248.7 million, while commission income from project marketing services dropped 38.1 per cent to S$113.5 million in the first half year.
Earnings per share for the half year was S$0.0298, lower than the S$0.0365 for H1 last year.
The board declared an interim dividend of S$0.025 per share for the half year, down from an adjusted dividend per share of S$0.0275 for the same period last year. The dividend will be paid on Sep 4, after book closure on Aug 24.
PropNex executive chairman and chief executive Ismail Gafoor said the property market is typically slower in the first half of the year.
&ldquo This year, sentiment in the property market was compounded by two cooling measures introduced in H1 (February Budget measures and April cooling measures), and elevated interest rates as high as 4.5 per cent in the beginning of 2023,&rdquo he added.
The group is more confident when it comes to the second half of 2023, with interest rates easing below 3.5 per cent and the launch of around 33 new projects.
It estimated overall private home prices to grow between 4 per cent and 5 per cent, with developers&rsquo sales to range from 7,000 to 7,500 units, excluding executive condominiums.
dont be gullible, govt knows prices have overshot be it bto, condos etc, shophouses ABSD and SSD soon will be implemented to prevent too many FLIPPINGS! absd and ssd objective for homes introduced to mitigate ever rising prices and FLIPPING, if this objective is waylaid, good luck to consumers, got to pay through their nose, already F& B complaining like mad on the high rent on every renewal due to ever changing landlords who primarily are ultra rich foreigners, family offices, big institutions and locals
spore cannot be like honkong, hk cannot change the party singapore is otherwise, dyodd for buyers/sellers
spore cannot be like honkong, hk cannot change the party singapore is otherwise, dyodd for buyers/sellers
property advancing
cloudy.mountain ( Date: 02-Aug-2023 21:12) Posted:
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charging up the last couple days. what' s happening?
propnex is expanding fast in the regions with numberous office set up and this will bring in addtional revenue to the group. Just look at the massive increase of revenue they got for past years.
The fact that a stock split is done is to have more shares liquidity flow in the market.
An understatement that the TP quoted by brokeage firms and maybank is around $1.2.
Definitely an undervalue counter
Rebounding back to $2 again?.
The fact that a stock split is done is to have more shares liquidity flow in the market.
An understatement that the TP quoted by brokeage firms and maybank is around $1.2.
Definitely an undervalue counter
Rebounding back to $2 again?.
Maybank lifts PropNex&rsquo s TP to $1.20 amid residential property market resilience
Maybank Securities analyst Eric Ong has retained his &ldquo buy&rdquo call on PropNex OYY -0.97% with a higher target price of $1.20 from $1.10 previously.
This is amid Singapore&rsquo s residential property market resilience on the back of strong underlying demand for housing, despite two rounds of cooling measures in the past seven months.
In his June 1 report, Ong notes that PropNex may register softer 1HFY2023 earnings y-o-y due to lack of project launches in 4Q2022 and 1Q2023. Despite this, he expects the company&rsquo s performance to rebound in 2HFY2023.
PropNex may see its transaction volumes improve with more supply. Ong points out that the supply of private housing under the Government Land Sales programme has increased from 3,500 units on the Confirmed List in the 2H2022 to 4,100 units in 1H2023.
Meanwhile, on the public housing front, the Housing and Development Board (HDB) will also launch up to 23,000 flats this year aside from about 40,000 new flats in total from 2024-2025, subject to prevailing demand.
Given that locals and permanent residents still dominate home sales, Ong expects most new launches to proceed as scheduled. However, developers will need to price their units more sensitively given the high interest rates and uncertain macro environment, he says.
&ldquo In fact, Far East Organization and its joint venture partner Sino Group sold 520 units at The Reserve Residences on its first weekend on May 27 and 28. This sales figure translates to 82% of units released (635) and 71% of total units (732) at an average price of $2,450 per sq ft,&rdquo adds Ong.
PropNext&rsquo s rental, HDB resale, landed, commercial and industrial segments are unlikely to be affected much by the latest cooling measures, Ong says. Together, these segments account for close to 40% of its FY2022 revenue.
While there may be some slowdown in the sales of high end and luxury homes in the core central region, Ong believes that foreign investors may shift their focus to commercial and shophouse properties.
Maybank rolls forward PropNex&rsquo s valuation to FY2024 and pegs it at a higher PE of 15x from 14x previously, given its growing market share and better trading liquidity post 1-1 bonus issue in May 2023.
Ong also notes that during May 19 to 22, PropNex executive director Kelvin Fong acquired 784,200 shares in the open market at an average price of $1.02 per share, lifting his direct and deemed interest in PropNex to 8.85% from 8.75% previously.
UOBKH raises PropNex target price to S$1.16
UOB Kay Hian (UOBKH) has raised its target price on real estate agency PropNex to S$1.16, from S$1.07 previously. It is bullish on the company&rsquo s planned foray into the commercial property segment, which will add to its strength in the residential property market.
The brokerage has maintained its &ldquo buy&rdquo call on the counter.
The new target price is based on a price-to-earnings (PE) multiple of 11.1 times, and one standard deviation above the company&rsquo s average PE of 9.1 times over the 2021-2023 period.
UOBKH said it had previously used a timeframe of 2018-2023 for PropNex&rsquo s average PE. This was, however, not applicable now, as the average PE would be dragged down by the low PE multiples of three to four times in 2020.
It added that using a PE multiple one standard deviation above average was reasonable on the basis of its &ldquo (great) confidence in the company&rsquo s ability to maintain and grow its market share&rdquo .
Analyst Adrian Loh said that in the medium term, PropNex&rsquo s earnings could be boosted by new growth plans to enter the commercial market with the establishment of a consultancy arm, which will offer leasing and valuation consultancy services.
The company &ldquo appears to be in a strong position&rdquo in the residential property segment, said Loh, noting that the number of agents had increased 8 per cent year on year to nearly 12,000 agents in 2022.
&ldquo PropNex remains the go-to stock for exposure to Singapore&rsquo s residential property market, given its dominant market share.&rdquo
The analyst said that strong sales numbers at recent launches such as The Reserve Residences and Blossoms By The Park are a sign that recent Additional Buyer&rsquo s Stamp Duty hikes had little to no impact on local demand, a &ldquo positive for PropNex in our view&rdquo .
He also noted that the company ended the year 2022 in a net cash position of S$139 million, which represents over one-fifth of the company&rsquo s market capitalisation, even after paying out nearly S$50 million in dividends.
PropNex
Between May 19 and 22, PropNex : OYY 0% executive director Kelvin Fong Keng Seong acquired 748,200 shares at an average price of S$1.02 per share. This increased his direct and deemed interest in Singapore&rsquo s largest listed real estate group from 8.75 per cent to 8.85 per cent.
His preceding acquisitions were in July 2022, with 72,100 shares acquired at S$1.52 per share.
Fong oversees the group&rsquo s training development curriculum and also administers the development of IT strategies and technology innovations to improve the group&rsquo s competitive edge in the industry.
Prior to joining the management team, Fong was one of the top team leaders and his team of salespersons has a strong track record for outstanding sales performance and excellent customer service.
Fong also spearheads the sales and leadership training programmes.
In a presentation on Apr 6, Fong noted that with its regional reach, PropNex maintained a salesforce of close to 15,000 salespersons.
In 2022, PropNex launched its fifth overseas brand presence in Australia. PropNex&rsquo s real estate brokerage services are operated by its wholly owned flagship subsidiary PropNex Realty Pte Ltd. PropNex Realty derives commission-based fees through the provision of property brokerage.
In Singapore, the group maintains a substantial market share in the residential segments of new project launches, private resale, HDB resale and rental including commercial and industrial properties.
On the recent round of cooling measures directed at the Singapore property market, PropNex maintained that the government is moving early to rein in any exuberance that may be building up in the residential property market, seeing that overall private home prices rose by 3.3 per cent in Q1 2023 compared to Q4 2022, as shown by the URA property price index flash estimates.
Very unlikely transaction volume will fall even with the latest 60% ABSD measures on Foreigner. Foreigners only make up approx 1% of the residential purchase in Sg. The main bulk of the purchase are from SG which makes up 80+% and SPR make up around 15% of the Purchase of Residential properties. There is a very strong underlying demands from 1st property owners espcially with the rising rentals.
With the latest ABSD measures on Foreigners, this will boost the populations with many converting to SPR or SG to buy residential properties which will drives the demands further. And foreigners who not willing to pay ABSD, they will go for commercial properties and park their money in sg as they see Sg is an attractive place to invest with political and financial stability + friendly tax bracket for foreign investments in sg.
Before anyone try to spread negative news or fake news hoping to drive the share prices down to snap up, the wise ones will do ample researches and also understand the policies of the govt.
And the objective of the govt on the latest measures are very clear, give the 1st property owners a better chance to buy first and message to 2nd residential property owners who are buying for investments to hold their horses or be prepared to pay higher ABSD. For 2nd property owners who are ready/prepared to pay 17% ABSD, another 3% of ABSD is nothing much in actual fact since mostly are buying about $3M quantum and below. If anything above $5M quantum, yes it makes abit more difference. It just additional money to the govt revenue. In the longer term, prices will still continue to appreciate over a period of time and funds preservations against inflation than to allow money to sit in the bank. It' s better to park in property than to allow the funds to sit in the bank.
The latest revision of BSD and ABSD is also a reflection that the govt failed to anticipating the demand of the property market which is already strong pre-pandemic times and covid-19 simply amplify the scarce supply situation. The ABSD together with the 15month waiting people for pte pty owners wanting to downgrade to HDB is also a way for govt to buy some time to ramp up more supplies in the coming years and take opportunities to earn more from the hot market via stamp duties.
Baically, the market in sg are flushed with liquidity, very strong demand and lots of upgraders + 1st property buyers.
With the latest ABSD measures on Foreigners, this will boost the populations with many converting to SPR or SG to buy residential properties which will drives the demands further. And foreigners who not willing to pay ABSD, they will go for commercial properties and park their money in sg as they see Sg is an attractive place to invest with political and financial stability + friendly tax bracket for foreign investments in sg.
Before anyone try to spread negative news or fake news hoping to drive the share prices down to snap up, the wise ones will do ample researches and also understand the policies of the govt.
And the objective of the govt on the latest measures are very clear, give the 1st property owners a better chance to buy first and message to 2nd residential property owners who are buying for investments to hold their horses or be prepared to pay higher ABSD. For 2nd property owners who are ready/prepared to pay 17% ABSD, another 3% of ABSD is nothing much in actual fact since mostly are buying about $3M quantum and below. If anything above $5M quantum, yes it makes abit more difference. It just additional money to the govt revenue. In the longer term, prices will still continue to appreciate over a period of time and funds preservations against inflation than to allow money to sit in the bank. It' s better to park in property than to allow the funds to sit in the bank.
The latest revision of BSD and ABSD is also a reflection that the govt failed to anticipating the demand of the property market which is already strong pre-pandemic times and covid-19 simply amplify the scarce supply situation. The ABSD together with the 15month waiting people for pte pty owners wanting to downgrade to HDB is also a way for govt to buy some time to ramp up more supplies in the coming years and take opportunities to earn more from the hot market via stamp duties.
Baically, the market in sg are flushed with liquidity, very strong demand and lots of upgraders + 1st property buyers.
iinvestor ( Date: 05-May-2023 09:22) Posted:
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good point.
1. Government should review why Singapore needs so many agents also, 30K plus head counts, this includes the undisclose no of agents who are PRs too. why PR agents number are undisclosed? Many of the PR agents are working from their home countries and fly in and out of the country and they earn very impressive commission as cost is lower there.
why we need PRs to be agents? aren' t they suppose to fulfill the work force lack in Singapore.
2. Propnex ,an agency income 60MIL about, is double of CDL developer about 30mil, justifyable?
3. The company income comprises the charges to the agents , eg compulary business convention fees(attend or not attend), keep running many agents seminars charging fees etc, Just imaging assuming head counts of 12000, that is a few millions income to the company.
4. expect in the bad market situation, agents will leave and move to more reasonable and affordable agency.
5 so, the stock price don' t drop, more powerful than Government listed companies, is indeed very questionable.
1. Government should review why Singapore needs so many agents also, 30K plus head counts, this includes the undisclose no of agents who are PRs too. why PR agents number are undisclosed? Many of the PR agents are working from their home countries and fly in and out of the country and they earn very impressive commission as cost is lower there.
why we need PRs to be agents? aren' t they suppose to fulfill the work force lack in Singapore.
2. Propnex ,an agency income 60MIL about, is double of CDL developer about 30mil, justifyable?
3. The company income comprises the charges to the agents , eg compulary business convention fees(attend or not attend), keep running many agents seminars charging fees etc, Just imaging assuming head counts of 12000, that is a few millions income to the company.
4. expect in the bad market situation, agents will leave and move to more reasonable and affordable agency.
5 so, the stock price don' t drop, more powerful than Government listed companies, is indeed very questionable.
Johnsnow ( Date: 06-May-2023 14:18) Posted:
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You think everybody is as stupid as you and everyone can be easily smoked?
Johnsnow ( Date: 06-May-2023 14:18) Posted:
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This kind of announcement property stocks still cannot come down, the gov will have to chop their head. Lesser revenue for property companies and agents need to work double hard to smoke buyers and sellers
Government put in all effort to cool the market and also with high interest rate can property still going high?
iinvestor ( Date: 05-May-2023 09:22) Posted:
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property transactions looks likely to fall....and this one too.
those who did not know of the bonus issue got burned and will just burn it all next week
Spike18 ( Date: 04-May-2023 17:26) Posted:
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Price will drop further next Tuesday after allotment of bonus shares ...
Joelton ( Date: 03-May-2023 12:25) Posted:
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PropNex falls back 15.2% from previous week&rsquo s highs
SHARES of PropNex : OYY -14.4% opened the new trading week lower on Tuesday (May 2) morning, after a surge in share price at the previous week&rsquo s close.
As at 10.29 am, PropNex&rsquo s shares were down 15.2 per cent or S$0.19, after 2.9 million shares changed hands. It hit a low of S$1.06 &ndash closer to its adjusted closing price of S$1.005 on Apr 27, before it jumped to S$1.25 on Apr 28.
No married deals were recorded in early trading hours, ShareInvestor data indicated.
The Singapore Government raised its Additional Buyer&rsquo s Stamp Duty rates on Apr 27, with foreigners bearing the brunt of the increases. In response, PropNex released a statement of confidence to note foreigners accounted for only 4.4 per cent of its private home sales in 2022.
The real estate agency began trading on an ex-dividend and ex-bonus basis on Apr 28.
correctly said, now dopping mildly, will for sure drop fiercely next few days, agents unloading fiercely to profit and get out leow
gosharej ( Date: 29-Apr-2023 20:09) Posted:
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The mystery of PropNex&rsquo s share price surge
IT IS probably a mistake to bet against the resilience of Singapore&rsquo s residential property sector &ndash even in the wake of an unexpected round of cooling measures. But the remarkable buoyancy of PropNex&rsquo s share price might prove to be a short-lived anomaly.
On Thursday (Apr 27) &ndash the first trading day after the government announced further hikes in Additional Buyer&rsquo s Stamp Duty (ABSD) &ndash PropNex closed at S$2.01, down more than 6.5 per cent versus the previous day&rsquo s close of S$2.15.
On Friday, when PropNex began trading ex for its final dividend of S$0.08 per share and a one-for-one bonus issue, the stock closed at S$1.25. This was 29.5 per cent above the previous day&rsquo s price, after adjusting for the dividend and bonus issue.
It was also 20.8 per cent above PropNex&rsquo s adjusted closing price on Wednesday, before the cooling measures were announced.
One explanation for this surprising strength in PropNex&rsquo s share price is that there is some confusion in the market, caused by the ex-bonus date coming right after the latest ABSD hikes.
Another explanation is that investors are simply excited about the outlook for PropNex in spite of the latest ABSD hikes. Indeed, PropNex climbed steadily through the Friday trading session on elevated volumes. Its closing price of S$1.25 was the high for the day.
Statement of confidence
PropNex itself does not seem too worried about the most recent ABSD hike having an adverse impact on its business. On Apr 27, the company pointed out that foreigners &ndash who have suffered a doubling in ABSD to 60 per cent &ndash accounted for only 4.4 per cent of private home sales in 2022.
Singaporeans and permanent residents (PRs), who accounted for 95 per cent of private home sales in 2022, were hit with smaller increases in ABSD. Singaporeans buying their second residential property will now pay an ABSD of 20 per cent, up from 17 per cent. PRs buying their second residential property will now pay 30 per cent, versus 25 previously.
Singaporeans buying their first home still pay no ABSD, while the ABSD for PRs purchasing their first residential property remains at 5 per cent.
PropNex went on to say that it has a diversified revenue base, with significant exposure to the rental, Housing and Development Board (HDB) flat resale, landed, commercial and industrial sectors &ndash which it does not expect to be significantly affected by the latest ABSD hikes.
&ldquo Such revenue segments account for close to 40 per cent of our revenue for FY2022,&rdquo PropNex said.
Successive rounds of cooling
PropNex may be justified in shrugging off the latest ABSD hikes.
Shares in the company began trading in the local market on Jul 2, 2018, following an initial public offering at S$0.65 per share (not adjusted for the bonus issue).
Four days later &ndash on Jul 6, 2018 &ndash the government unleashed a round of cooling measures that included ABSD hikes and tighter borrowing limits.
Not surprisingly, shares in PropNex promptly sank below their initial public offering (IPO) price.
The government introduced yet another round of ABSD hikes and further tightening of borrowing limits on Dec 16, 2021.
On Sep 30, 2022, borrowing limits were tightened again. In addition, the government imposed a wait-out period of 15 months on private property sellers before they are allowed to buy a resale HDB flat.
These successive rounds of cooling measures did not have a lasting effect on PropNex&rsquo s financial performance, though. With a steadily expanding sales force, PropNex&rsquo s revenue has more than doubled since 2018 while its earnings have more than trebled.
Big returns, no debt
For FY2022, PropNex reported a 3.9 per cent increase in earnings to S$62.4 million on a 7.5 per cent rise in revenue to S$1,029.2 million. The company ended FY2022 with S$138.9 million of cash on its books and no debt.
Since the end of 2018, shares in PropNex have delivered a total return of 618.1 per cent (with dividends reinvested). Its smaller peer Apac Realty returned 100.7 per cent over the same period, while the Straits Times Index returned 26.3 per cent.
At its closing price on Friday, PropNex had a market capitalisation of S$925 million or about 14.8 times its FY2022 earnings. Based on PropNex&rsquo s total bonus-adjusted dividends of S$0.0675 for FY2022, the stock offers a dividend yield of 5.4 per cent.
Still, the surprising strength in PropNex shares since they began trading ex-bonus last week should probably give investors pause. Even if the latest ABSD hikes ultimately have no effect on the company&rsquo s long-term financial performance, the surge in its bonus-adjusted share price seems hard to justify.
It is also worth keeping in mind that after the 2018 cooling measures knocked PropNex below its IPO price, it remained underwater until late 2020. Chasing an elevated stock can be risky even if it is underpinned by solid long-term fundamentals.
So, what does all this mean? As the Singapore Exchange often says, investors should trade with caution.
it is not lots of shorts, most likely is the agents unloading already. They ride on this bonus issue to unload, as normal time, no buyer support but only agents are buying thin quantity as the price moves high before xbonus
This company is not for investors.
This company is not for investors.