APAC Realty is riding on the buoyant property market, and has its 1QFY2021 results to show for it, says DBS Group Research analyst Ling Lee Keng.
In a May 14 note, Ling is maintaining her “buy” call on the company, with a raised target price of 74 cents from 61 cents previously.
“We project the transaction value for Singapore’s overall property market to grow by a strong 27% in FY2021F and another 3% in FY2022F. This is revised up from our previous assumption of 6.5% in FY2021F and 6.6% in FY2022F, after 14% growth in FY2020,” writes Ling.
See: APAC Realty on the alert for shifting regulations; eyes bigger regional presence
The positive market sentiment on the back of the low interest rate environment, healthy supply of projects, expectations of a gradual economic recovery and healthy housing demand outweigh the Covid-19 impact, notes Ling.
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APAC Realty’s total revenue for 1QFY2021 was up 70% y-o-y to $153.1 million. Net profit surged 114% y-o-y to $7.5 million, accounting for 40% of our forecast and 44% of consensus, “way above expectations,” says Ling. New homes revenue jumped 133% to $54.3 million while resale and rental revenue gained 49% to $96.4 million.
“The buoyant property market was partly driven by positive market sentiment, on the back of the low interest rate environment and expectations of a gradual economic recovery, despite the Covid-19 pandemic,” says Ling.
APAC Realty is one of the leading players in the real estate brokerage industry in Asia. APAC Realty operates three main business segments: the real estate brokerage services; franchise agreements; and training, valuation and other ancillary services.
See also: APAC Realty reports 1QFY21 earnings of $7.5 million, up 114% y-o-y
Ling notes that ERA has secured marketing roles for 23 projects for 2021, with a total of 8,745 units. Though lower than 24 projects in 2020 and 43 in 2019, supply is still healthy, he adds.
Overall market share for ERA in terms of transaction volume in 1Q21 increased slightly to 28.2%, from 27.5% in 1QFY2020. New home sales segment fared well, with market share improving to 32.2% from 29.6% in 1QFY2020.
“On the back of higher transaction value assumption, we have raised FY2021F/FY2022F earnings by 38%/31%,” says Ling.
Meanwhile, RHB Group Research analyst Vijay Natarajan is similarly optimistic, revising FY2021F to FY2023F earnings up by 20-43%.
In a May 21 note, Natarajan is maintaining his "buy" call on APAC Realty, with a target price of 70 cents, which represents a 35% upside, and he expects an approximately 7% dividend yield.
"With net profit expected to jump 39% y-o-y, we expect a similar increase in dividends to 3.5 cents from 2.5 cents last year, resulting in an attractive dividend yield of 7% (based on a 54% payout)," writes Natarajan.
As at 1.20pm, shares in APAC Realty are trading 1 cent higher, or 1.90% up, at 53.5 cents.
