Analysts at DBS Group Research and CGS-CIMB Research have maintained their “hold” and “add” calls on APAC Realty CLN , highlighting its robust project pipeline.
DBS analyst Ling Lee Keng notes that as at Feb 22, the company has secured marketing agent mandates of 36 residential projects with close to 12,000 new home units launched and to be launched in FY2023.
In 2022, APAC Realty’s ERA was appointed sole or joint marketing agent to 14 projects with a total of 4,032 units or an estimated 30.6% of the market share of the new homes segment.
“As the growth of the business is dependent on the agent strength, the group has set a target of achieving an agent count of approximately 10,000 agents over the next two years. As at Feb 22, ERA Singapore had 8,527 trusted agents — an increase of 5% from 8,144 trusted agents on Jan 1,” adds Ling.
To drive growth going forward, APAC Realty has executed its regional expansion strategy with the acquisition of an additional 22% stake in ERA Vietnam, bringing its total ownership to 60%.
The firm had also established its Capital Markets and Investment Sales (CMIS) business unit on Feb 22 to engage individual and institutional investors with services across the commercial, industrial, retail and residential sectors, says CGS-CIMB analyst Lock Mun Yee. To date, the CMIS team has recorded over $43 million in transaction value and secured marketing roles for projects with a total transaction value of about $1.58 billion.
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On the back of a resilient property market supported by demand from both local home buyers and foreign investors, DBS has tweaked their property transaction volume assumption for APAC Realty’s various segments by 5% to 7% for FY2023 and FY2023. Consequently, earning estimates for FY2023 and FY2024 were raised by 13% and 17% respectively.
With higher earnings forecasts, DBS’s target price is raised to 63 cents from 59 cents previously, pegged to 8.5x PE FY2023 earnings, near its average four-year PE.
“1HFY2023 could still be weak from the cooling measures introduced on Sept 30, 2022 and also the high interest rate environment. 2HFY2023 could be stronger with more new launches expected to be rolled out,” says Ling.
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Meanwhile, Lock tweaks her FY2023 to FY2024 EPS upwards by 0.95%-2.02% post APAC Realty’s results aside from maintaining her target price at 77 cents.
CGS-CIMB believes APAC Realty’s share price is likely supported by a projected FY2023 dividend yield of 11.3%. Lock cites ability to gain further market share in both the primary and secondary residential segments and identifying new growth drivers as a key rerating catalyst.
As at 3.26pm, shares in APAC Realty are trading 0.5 cents higher or 0.8% up at 63 cents.
