REAL estate agency PropNex reported a 10.6 per cent improvement in its bottom line for its fiscal third quarter despite a dip in revenue, it said in an exchange filing on Thursday morning.

 

Net profit attributable to owners of the company grew to S$6.8 million for the three months ended Sept 30, 2020, from S$6.1 million in the year-ago period.

 

Revenue fell 3.3 per cent to S$118.5 million, from S$122.5 million in the year-ago period, mainly due to a decrease in commission income from agency services of about S$10 million due to the impact of Singapore' s " circuit breaker" , PropNex said.

 

This was partially offset by an increase in commission income from project marketing services of approximately S$6.6 million, driven by a higher number of transactions completed in Q3 2020.

 

Other income rose by 32.2 per cent year on year to S$1.6 million for the third quarter, mainly due to an increase of government grants under Singapore' s Jobs Support Scheme.

 

Staff costs fell by 3.4 per cent to S$3.4 million on lower staff welfare expenses, as the annual staff retreat was cancelled. Other expenses decreased by 6.6 per cent to S$1.9 million due to lower advertising and marketing expenses.

 

Earnings per share for the quarter was 1.83 Singapore cents, up from 1.65 cents in the year-ago period.

 

" We adapted our marketing approach quickly to safe-distancing measures when the pandemic first struck," said Ismail Gafoor, co-founder, executive chairman and chief executive of PropNex, noting that the company adopted digital technology such as online consumer seminars and a virtual property expo.

 

" We managed to increase our market share across three segments - new launches, private resale and HDB resale - over this period, allowing us to grow our net profit after tax by 9.3 per cent despite the very challenging operating environment," he added.

 

With Covid-19 measures likely to extend into 2021, the group believes that digital tools, such as virtual showflats, will continue to serve as an additional touchpoint for developers and salespersons to connect with potential buyers, Mr Ismail said.

 

For the nine months to September, PropNex reported an 82.8 per cent increase in net profit at S$21.6 million, from S$11.8 million during the same period last year. Revenue grew 24.6 per cent year on year to S$360 million.

 

" Despite the pandemic and economic uncertainties, the Singapore real estate industry has performed well in the third quarter of 2020," PropNex said, adding that this was largely on the back of strong domestic demand in both the private residential and public housing segments.

 

" The group believes that the momentum is likely to continue to the fourth quarter, and overall transaction volume for the full year of 2020 is expected to remain strong."

 

On Oct 22, PropNex executive director Kelvin Fong Keng Seong acquired 112,800 shares of the listed company, for a consideration of S$71,179, at an average price of 63.10 cents per share.

 

His preceding acquisitions were on Oct 8, with 300,000 shares acquired at 60.00 cents per share, and between July 23 and 24, with 322,800 shares acquired at 52.90 cents per share.

 

Mr Fong oversees the group' s training development curriculum, and administers the development of IT strategies and technology innovations to improve the group' s competitive edge in the industry.

 

Mr Fong' s total interest in PropNex is now 8.26 per cent.

 

On Oct 8, PropNex executive director Kelvin Fong Keng Seong increased his interest in PropNex.

 

He acquired 300,000 shares of PropNex, for a consideration of S$180,000, at an average price of 60.00 cents per share.

 

His preceding acquisition, between July 23 and 24, saw Mr Fong acquire 322,800 shares at an average price of 52.90 cents per share.

 

Mr Fong oversees the group' s training development curriculum, and administers the development of IT strategies and technology innovations to improve the group' s competitive edge in the industry.

 

Mr Fong' s total interest in PropNex is now 8.23 per cent.

Real estate agency' s boss Ismail Gafoor credits its sales people as main reason for firm' s performance

 

AS NEW private home sales rebound sharply, PropNex, Singapore' s largest real estate agency is sitting pretty given its ringside seat in the property market which has shown remarkable resilience amid the pandemic crisis.

 

The agency force of 8,748 agents lets the company enjoy economies of scale without the expensive cost of salaries as agents are paid only commissions, said Ismail Gafoor, PropNex co-founder, executive chairman and CEO. The group' s agency force has grown organically, 18 per cent from a year ago, he noted. In January 2019, PropNex had 7,400 agents.

 

The group has increased its market share in all segments, he told The Business Times. It has taken a lion share of 68.7 per cent in Q2 2020 in the number of units sold for new launches of private property projects, jumping from 57 per cent in Q1 and 48 per cent in 2019.

 

From April, the beginning of the " circuit breaker" to end-July, PropNex captured about 53 per cent market share for closing 1,369 units in the new launches segment, based on 63 active projects that the group was marketing.

 

In the private property resale market, PropNex' s market share is also up sharply to 54.7 per cent in Q2 2020, from 41.9 per cent in Q1 and 45 per cent in 2019. Its market share for HDB resale is 52.7 per cent in Q2 2020, up from 50.6 per cent in Q1 and 51.2 per cent in 2019.

 

" We' re doing very well the main reason is our sales people which represents 28.5 per cent of all agents," Mr Ismail said.

 

The top three agencies here are PropNex, ERA Realty Network (7,321 agents) and OrangeTee & Tie (4,359 agents).

 

Savills Singapore' s associates arm - Savills Residential - will merge with Huttons Asia, and the move will see Huttons strengthen its current pool of 3,044 brokers, with all 582 Savills commission-only residential brokers being invited to join, said a Business Times report this month.

 

" I have (over) 8,700 agents, I don' t pay a cent in salary (for them)," said Mr Ismail. As for its overseas network, PropNex operates on a franchise model in Indonesia, Malaysia and Vietnam where it receives " royalties from their business."

 

To be clear, the group has 172 staff and staff cost was S$3.5 million in Q2 2020.

 

Of course not all agents are active Mr Ismail estimates about 20 per cent of the group' s agency force do not earn at least S$20,000 a year in commission. He also pointed to the group' s asset-light model which offers flexibility, especially in a fast-changing environment which will help it get through the current crisis.

 

Bringing value add to customers as the company leverages on technology and invests in digitalising its business processes more remains the strategy, Mr Ismail noted. Agents get continuous training as well.

 

Last week it announced a S$7.3 million career enhancement package, with each salesperson getting S$835 worth of financial assistance, digital tools support and training subsidies.

 

PropNex held a virtual expo in July with 30,000 viewers, where it hosted a series of 29 Webinars and showcased over 1,000 listings.

 

Next month, PropNex in a partnership with Mediacorp and 99.co will create a virtual Singapore Property Show 2020 to showcase close to 20 new projects with immersive features such as narrated 4D virtual tours embedded into every project listing.

 

PropNex which listed on July 2, 2018 posted stellar results for H1 2020, as net profit surged to S$16 million, up 150.7 per cent year-on-year and revenue growth of 45.2 per cent to S$241.5 million. The robust performance puts it among an enviable class of 69 SGX-listed companies out of 400 that posted higher H1 2020 profits over the same period last year.

 

The group expects the majority of the impact from the contraction of market volume during the circuit breaker period which ended in June to be reflected in its financial performance in the second half of the year. Q2 sales for private new homes, private resale and HDB plunged from Q1 20.3 per cent, 55 per cent and 42 per cent respectively. Generally, real estate revenues are recognised two to four months later, from the time transactions are concluded.

 

While Mr Ismail does not make light of the challenges posed by the pandemic which has thrown thousands out of work, he points to the market' s resilience.

 

" Looking at the Q2 market performance, we think it is a testament to the resilience of the private residential sector. In our view, the property market entered the crisis with strong fundamentals, as various property measures over the years have curbed overexuberance in the market," he said.

 

Home buyers are young people, newly married couples and HDB upgraders who are the largest group, he pointed out.

 

Those who enjoy job security work in sectors such as IT and the civil service, and buyers are spurred by record low interest rates, he added.

 

Employment fell by a record 103,500 in the second quarter of the year, a staggering four times the previous record contraction - in the first quarter - of 25,600, according to the Singapore Ministry of Manpower' s Labour Market Report released on Monday. Retrenchments more than doubled to 8,130 in the quarter, compared to 3,220 in Q1. This was still below previous peaks during the dotcom bubble and the global financial crisis.

 

" Overall the market is not better than last year the pandemic has taken its toll," Mr Ismail said.

 

According to latest URA (Urban Redevelopment Authority) data, developers sold 1,256 private homes in August, 16 per cent higher than July' s take-up.

 

In the first eight months of this year, developers sold an estimated 6,198 new private homes, 4.5 per cent lower than that in the same period last year.

 

For the full year, Mr Ismail expects new home sales to reach between 9,000 and 9,500 units in 2020 - or about 4 per cent to 9 per cent lower than the 9,912 new homes sold in 2019.

 

There is an anticipated line-up of 29 new launches with a total of more than 9,670 units to be rolled out in the subsequent quarters and PropNex has been appointed for 15 projects to date.

REAL estate agency PropNex posted a net profit of S$7.26 million for the second quarter ended June 30, almost doubling from the S$3.7 million record in the same period a year earlier, on higher revenue and an increase in contribution from project marketing services.

 

Revenue climbed 15 per cent to S$105.93 million, mainly due to the increase in commission income from project marketing services driven by higher number of transactions completed in Q2 following the recovery of the private residential market from the property cooling measures of July 2018, said the group in a bourse filing.

 

Earnings per share for the quarter stood at 1.96 Singapore cents, up from one cent previously.

 

An interim dividend of 1.5 Singapore cents was declared, payable on Sept 3.

 

For the half year, net profit came in at S$14.84 million, up from S$5.7 million previously. Meanwhile, revenue jumped 45.2 per cent to S$241.55 million.

 

In its outlook, the group said that private new home sales may see a pick-up in sales momentum for the remaining year as developers roll out more projects with competitive prices over the next few months.

 

" While the economic downturn could lead to some buyers postponing their buying decision, the group believes that low interest rates and fiscal policy measures supporting businesses and individuals will broadly lend support to housing demand and underpin sales," PropNex said.

 

Projects located outside central region such as Treasure At Tampines, Parc Clematis and The Florence Residences performed well in Q2, and appeared to be steadily transacting units while keeping prices fairly stable, the group noted.

 

It expects most of the impact from the contraction of market volume during the " circuit breaker" period to be reflected in the group' s financial performance in the second half year.

 

Between July 23 and 24, PropNex executive director Kelvin Fong Keng Seong increased his interest in PropNex. He acquired 322,800 shares for a consideration of S$170,774, at an average price of 52.90 cents per share.

 

This followed his acquisition of 80,100 shares at an average price of 52.47 cents between July 21 and 22.

 

Mr Fong oversees the group' s training development curriculum, and administers the development of IT strategies and technology innovations to improve its competitive edge in the industry.

 

Mr Fong' s total interest in PropNex is now 8.15 per cent.

 

On July 22, PropNex co-founder, executive chairman and CEO Mohamed Ismail Gafoor acquired 400,000 shares of the listed company for a consideration of S$210,000.

 

At 52.5 cents per share, the acquisition took his total interest in Singapore' s largest listed real estate agency from 64.57 per cent to 64.68 per cent.

 

The majority of Mr Ismail' s deemed stake is via his 62 per cent ownership of P& N Holdings Pte Ltd.

 

With more than 20 years' experience in the real estate industry, Mr Ismail has an intimate understanding of the industry.

 

He is responsible for the group' s strategic direction and oversees business operations of the group, including functions such as compliance, finance, human resources, legal, marketing, operations, sales and information technology.

 

Between July 21 and 22, PropNex executive director Kelvin Fong Keng Seong also increased his interest in PropNex. He acquired 80,100 shares of PropNex, for a consideration of S$42,028, at an average price of 52.47 cents per share.

 

Mr Fong oversees the group' s training development curriculum, and administers the development of IT strategies and technology innovations to improve the group' s competitive edge in the industry.

 

Prior to joining the management team, Mr Fong was one of the top team leaders, with his team of salespersons maintaining a strong track record for outstanding sales performance and excellent customer service.

 

Mr Fong' s total interest in PropNex is now 8.06 per cent.

 

PropNex is expected to report its H1FY20 (ended June 30) results in mid-August. For its Q1FY20, the group reported 252.1 per cent growth in net profit after tax to S$8.2 million, up from S$2.3 million in Q1FY19.

 

Achieved on the back of 82.7 per cent rise in revenue over the same comparative period, this was, in part attributed to the remainder of property transactions carried forward from FY19 as well as the recovery of the private residential market from the cooling measures.