1. What are some key focus areas for PropNex in the near term?
PropNex’s primary business is in the provision of real estate brokerage services comprising real estate agency and project marketing services.
Firstly, the Covid-19 pandemic has changed the manner in which real estate property transactions are carried out. As physical viewings of properties continue to be restricted, the group has invested in digital platforms that allow salespersons to conduct virtual viewings.
Secondly, based on data from the Council for Estate Agencies, PropNex currently has the largest salesforce in Singapore with close to 8,700 salespersons. We aim to be the first in Singapore to reach or exceed 10,000 salespersons within the next two years.
Thirdly, we plan to increase market share. In line with its growing salesforce, the group plans to increase current market share among real estate agencies from 45% to between 55%
and 60% within the next two to three years.
Finally, the group has a presence in Indonesia, Malaysia and Vietnam and it aims to expand into other countries within Asean, in the next five years.
2. Describe PropNex’s latest financial performance/profitability.
For 1HFY2020 ended June, the group achieved double-digit y-o-y revenue growth. This is a reflection of PropNex’s resilient business model. Despite the onset of Covid-19, PropNex also declared an interim dividend of 1.5 cents, an increase of 20% from last year’s.
Looking ahead, PropNex will continue to invest in our people, technology and infrastructure to pursue further growth opportunities in both Singapore and overseas markets.
3. Can you provide an overview of PropNex’s business mix and segments?
The group has four key business segments:
• Real estate brokerage where revenue is derived through commission-based fees from sales and rental of properties.
• Training services where its Life Mastery Academy provides training for salespersons.
• It also provides services such as facility maintenance, security management, and building diagnostics.
• Under its real estate consultancy services unit, it provides corporate sales and auction services, valuation and corporate leasing services.
4. What differentiates PropNex from its competitors and how does it stay ahead of competition?
The group believes that PropNex’s key success factors are:
• Technology embracement: Constant improvement of systems and technology to equip salespersons with the right tools to provide quality service to their clients. As a testament to these efforts, the group captured half of market share for new project launches since the start of Singapore’s “circuit breaker” on April 7 till July 31.
• Robust training programmes for salesforce: PropNex takes pride in being an industry leader for training and development. The group will continue to strengthen our competitive edge by refreshing and repackaging our training curricula to provide our salesforce with deeper domain knowledge.
• Collaborative corporate culture: The group’s collaborative corporate culture instills sharing among its people which, unlike technology and training programmes, cannot be replicated by competitors.
• Caring for our people: We are one of the first in the industry to implement several initiatives in this regard, including dual career paths, pension plans and spouse protection plans.
5. How has PropNex grown its capabilities and market share since IPO?
PropNex’s salesforce has grown from 6,684 as at Jan 4, 2018, to 8,675 salespersons as at July 3. With a larger salesforce and wider outreach to consumers, we have achieved larger market share and augmented marketing efforts in major local and international projects.
Since 2016, more focus was placed on project launches and we had transacted the most units among competing marketing agencies for several projects during the circuit breaker period in 2Q2020. PropNex has also expanded overseas and has more than 2,000 salespersons across Malaysia, Indonesia and Vietnam.
Considerable investments were made in IT infrastructure including the mobile app, PropNex PA which was launched in March 2019 for salespersons, and to improve consumer outreach.
6. What is PropNex’s philosophy regarding overseas expansion and what are its key focus areas?
The group’s long-term goal is to become a dominant player in the region. We believe it is imperative to work with like-minded partners who share PropNex’s work ethics and values, within new markets which we have set our sights on.
There are high expectations of our overseas partners, including their ability to mature into leading market players and ideally be among the Top Five real estate agencies within the country. We believe this will not only bring about economies of scale but also raise PropNex’s regional brand profile among investors, customers and developers.
7. How has Covid-19 impacted your business and what measures have you taken to mitigate the financial impact?
The Covid-19 pandemic has forced PropNex to change the way it operates. The group has leveraged on technology to deliver webinar training sessions for its salesforce and organised online seminars and virtual viewings for customers.
During the circuit breaker period, we observed buyers of Singapore properties became more comfortable with virtual viewings and online transactions. With this new trend in mind, PropNex hosted our first-ever Virtual Property Expo over the weekend of July 25–26 which attracted more than 30,000 viewers.
Separately, to support our salespersons during the circuit breaker, the $30-million PropNex Resilience Support Plan (PRSP) was rolled out on April 6, aimed at easing their financial burden.
8. What is the outlook for the Singapore residential property market post-Covid-19 and how will this impact PropNex’s strategy?
While the pandemic has been a dampener on the property market, we believe that the long-term outlook for Singapore’s residential market remains positive. Meanwhile, a subdued economy keeps property prices in check while the low interest rate environment continues to be supportive of home financing. Based on past trends, we observed that the residential market would recover after each crisis, and housing prices have kept in line with economic growth.
Salespersons training remains a key priority going forward. PropNex will ensure that our salespersons are able to play the role of consultants and continue to provide value-added services to clients.
9. What is PropNex’s current dividend policy? Will you maintain or change this policy?
The group does not have a dividend policy but had committed at the time of IPO to distribute dividends of at least 50% of profit attributable to owners of the company for FY2018 post-IPO and FY2019. PropNex had distributed $12.95 million in dividends to shareholders for FY2019 which translated to a dividend payout ratio of 64.6%.
Management understands the need for sustainable dividend payments to shareholders.
Hence, the group seeks to find a balance be- tween capital requirement for business growth and reasonable dividend yields to shareholders. Nonetheless, shareholders can be assured that higher amounts of dividends could be paid as the group’s performance improves.
10. What is PropNex’s value proposition to its shareholders and potential investors?
PropNex is celebrating our 20th anniversary this year. As a brand owner-manager, our goals are aligned with shareholders and we aim to grow PropNex into a leading regional brand within the next five years. We believe that PropNex’s asset-light and resilient business model offers flexibility and allows us to respond rapidly to crises as well as technology advancements while capitalising on new market opportunities.
Candace Li is a research analyst with Singapore Exchange
