SINGAPORE (Nov 13): DBS is maintaining its “buy” call on APAC Realty with a target price of $1.12.
The group on Thursday announced that its 3Q17 earnings increased 7.2% y-o-y to $5.5 million, while revenue surged 30.3% y-o-y to $105.5 million.
This was mainly due to an increase in market transactions compared to the same quarter last year.
See: APAC Realty posts 7.2% rise in 3Q earnings to $5.5 million as revenue jumps 30%
APAC Realty’s earnings came in above the research house’s expectations.
Meanwhile, the group’s wholly-owned subsidiary, ERA Realty, is one of Singapore’s largest real estate agents with about 6,176 registered agents, as at July 10.
In a Monday report, analyst Derek Tan says, “We believe that APAC Realty remains poised to deliver a robust 10% 2-year CAGR in EPS on the back of a turn in Singapore residential market.”
According to the analyst, having a sizeable agent base is important for the group to perform well, as it enables it to have a string and wider reach to a diverse base of potential property buyers, renters and allows the group to capture the lion’s share of market transactions in Singapore.
Singapore’s property market is expected to recover gradually over the next year with more transactions across all segments of the real estate market.
The group benefitted from a recovery in the Singapore residential market, where there is a substantial increase in transaction volume for the private primary and secondary market.
“Given the upturn in buyer sentiment driving demand for homes, we believe that the opportunity to surprise on the upside is high,” says Tan.
As at 4.45pm, shares in APAC Realty are trading 6 cents or 6.08% higher at 96 cents.
The stock is also trading 2.5 times FY17 book with a dividend yield of 0.9%.
