CGS-CIMB Research analyst Lock Mun Yee is keeping her “add” call on APAC Realty as the company’s net profit for the 1QFY2022 made up 31% of her forecast for the FY2022.
On June 17, APAC Realty reported net profit of $9.0 million, which was up by 20% y-o-y. Total revenue improved by 12% y-o-y to $171.1 million with new home brokerage revenue up 42% y-o-y to $77.2 million. The higher new home brokerage revenue was offset by the 4.6% y-o-y decline in resale and rental brokerage revenue to $92.0 million.
During the quarter, gross profit rose 21.2% y-o-y to $18.3 million as gross profit margin (GPM) remained relatively stable at 10.7%.
In spite of the figures, APAC Realty says it expects transaction volumes for its private and HDB resale segments to decline 15%-23% y-o-y in FY2022 due to the negative impact from the property cooling measures introduced in December 2021.
While the company’s market share increased for private resale and rental transactions, it also saw a lower market share for HDB resale volumes.
In the 1QFY2022, APAC Realty’s market share for new projects also slipped.
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On this, Lock is lowering her target price on APAC Realty to 84 cents from 93 cents previously.
She has also cut her earnings per share (EPS) estimates for the FY2022 to FY2024 by 12.9%, 5.3% and 4.8% respectively to “reflect a moderated market share for project marketing in those years”.
Despite the lower target price estimate, Lock believes that APAC’s share price is likely supported by a projected dividend yield of 10.4% for the FY2022.
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“Following the completion of the mandatory general offer by NHPEA Ace Realty Company (NHPEA) in June, we believe NHPEA could undertake a strategic and operational review of the company, with a view to realise synergies, economies of scale and cost efficiencies, and growth potential,” she says.
Potential re-rating catalysts to APAC’s share price include the ability to further gain market share in both the primary and secondary residential segments and identify new growth drivers, while a key downside risk is the delayed recovery of the property market due to a weak macro outlook.
Shares in APAC Realty closed flat at 59.5 cents on June 20.
