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DBS keeps 'hold' call on APAC Realty with 'healthy' 1HFY2022 but sees slower 2HFY2022

The Edge Singapore
·2-min read

The property market has shown its “resilience” amid global challenges thanks to strong demand from both local and foreign buyers.

DBS Group Research has kept its “hold” call on APAC Realty with an unchanged target price of 67 cents, following a slight earnings dip reported by the property agency for its 1HFY2022.

The company, which operates the ERA franchise, plans to pay an interim dividend of 3.5 cents per share for 1HFY2022, representing a payout ratio of 75%. Back in 1HFY2021, APAC Realty paid an additional special dividend of 3 cents per share as well.

DBS calls the 1HFY2022 numbers “healthy”, as the property market has shown its “resilience” amid global challenges thanks to strong demand from both local and foreign buyers.

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While the volume of transactions for 1FHY2022 dipped, they were generally transacted at higher prices.

APAC Realty’s revenue from brokering resale and rental deals dropped for 1HFY2022 but was partially offset by better new home sales.

In the first six months of 2022, the private residential market in Singapore saw a 30% y-o-y drop in transaction volume, with the steepest drop from the higher-margin new homes segment, which was down 40% y-o-y. The HDB resale segment also saw a 6.1% y-o-y decline in the same period.

DBS, in its Aug 9 note, points out that there’s a time lag of three to six months before revenue from transactions are booked. As such, DBS is expecting a slower 2HFY2022 for APAC Realty.

“Though demand remains strong, outweighing supply, especially for the new homes segment, this could be partly mitigated by the challenges of rising interest rates, higher inflation and rising land cost,” adds DBS.

APAC Realty closed at 69 cents on Aug 8, down 2.84% for the day.

 

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