Analysts from CGS-CIMB Research, PhillipCapital, and UOB Kay Hian Research are overall bullish on PropNex following a 160.2% y-o-y surge in the real estate agency’s 1H20 earnings to $14.8 million.
See: PropNex embraces digitalisation, reports 160% surge in 1H earnings to $14.8 mil
On a quarterly basis, 2Q20 earnings came in at $7.3 million, 96.1% higher than $3.7 million last year, with revenue increasing by 15.0% y-o-y to $105.9 million.
Despite the closure of showflats during the circuit breaker in Singapore from April to June, PropNex managed to capture about 53% of the market share by using embracing digital platforms to reach out to consumers.
CGS-CIMB analyst Lock Mun Yee has maintained her “add” call on the stock with a raised target price of 70.8 cents from 62.5 cents previously on the higher earnings.
PropNex’s 2Q20 and 1H20 earnings per share (EPS) of 1.96 cents and 4.01 cents respectively surpassed her expectations at 36.2% or 74% of her previous FY20 forecast.
Lock has also increased EPS for FY20F, FY21F, and FY22F by 13.0%, 16.6%, and 16.8% respectively.
While she anticipates volume for private residential sales to contract by an estimated 20% y-o-y in 2020 to 8,000 units, Lock believes that the agency has the ability to maintain its market share through “successful marketing strategies”.
UOB Kay Hian Research analysts Loke Peihao and Adrian Loh have also maintained their “buy” recommendation as PropNex’s results “exceeded” their expectations at around 74% of their forecasts for FY20.
Loke and Loh have increased their target price on the counter to 69 cents from 65 cents previously, as well as their net profit forecast for FY20 by 6%, which factors in some $1.8 million in government grants such as the Jobs Support Scheme (JSS) and rental rebates.
On the back of signs of a rebound in 3Q20 with July’s Option-to-Purchase (OTPs) showing a spike in new and resale volumes, as well as further government grants and rental rebates which could boost its bottom line, Loke and Loh remain positive on PropNex.
Finally, it’s a “buy” for PhillipCapital’s head of research Paul Chew as PropNex’s earnings for 1H20 came within his estimates.
Chew has also raised his target price for the stock to 70 cents from 60 cents previously, and made a “modest” increase to his FY20 earnings estimates by 3% due to the JSS grant, but raised his discounted cash flow (DCF) growth assumptions.
“Near-term, the drop in transaction volumes due to the lockdown will negatively affect 3Q20 earnings. However, we believe transactions have bottomed and have started to recover July onwards,” he says.
“PropNex has a high cash generative asset-light business model with minimal capital expenditure and working capital required. The company is committed to paying attractive and sustainable dividends. The current 7% dividend yield amounts to $14.8 million payout,” he adds.
As at 4.28pm, shares in PropNex are trading flat at 60 cents.
