PropNex reports 20.7% lower 2QFY2022 earnings of $13.1 mil

During the period, PropNex has declared an interim dividend of 5.5 cents, which will be paid out on Sept 2.

PropNex has reported earnings of $13.1 million for the 2QFY2022 ended June, 20.7% lower than earnings of $16.5 million in the same period the year before.

This brings the property agency’s 1HFY2022 earnings to $27.0 million, 13.8% lower y-o-y.

During the 2QFY2022, PropNex saw revenue decline by 11.4% y-o-y to $230.7 million due to the lower commission income from project marketing services as a result of fewer project marketing launches during the period. The lower commission income was partly mitigated by an increase in commission income from agency services in the quarter due to the higher number of transactions completed for agency services.

Gross profits fell by 15.0% y-o-y to $23.7 million in tandem with the revenue decline.

Profit before tax for the 2QFY2022 fell by 26.5% y-o-y to $16.2 million due to higher staff costs as the average staff headcount increased during the period. This was offset by higher other income.

During the 1HFY2022, PropNex’s revenue dipped by 1.8% y-o-y to $472.3 million due to the lower commission income from project marketing services and partly offset by the increase in commission income from agency services.

1HFY2022 gross profit fell by 6.5% y-o-y to $47.8 million in line with the lower revenue.

Profit before tax for the 1HFY2022 fell by 17.5% y-o-y to $34.2 million due to higher staff costs and offset by other income.

Earnings per share (EPS) for the 2QFY2022 and 1HFY2022 stood at 3.54 cents and 7.30 cents respectively on a fully diluted basis.

As at June 30, cash and cash equivalents stood at $133.8 million.

During the period, PropNex has declared an interim dividend of 5.5 cents, which will be paid out on Sept 2.

“We have seen that the property cooling measures in December 2021 tamed price growth in the private residential market in 2QFY2022 to a more sustainable pace. Transaction volumes softened in the first half of the year as compared to same period in 2021 as buyers held back on property purchases to monitor the impact of the fresh cooling measures introduced in December 2021,” says Ismail Gafoor, co-founder, executive chairman and CEO of PropNex.

“Despite fewer project launches at the start of the year, the group’s performance was balanced by higher income from the other segments as more transactions were completed in 2QFY2022. Other macro-economic factors during this period had also weighed on market sentiments and buying interests. Notwithstanding, the group turned in a reasonably resilient performance for 1HFY2022 and we are focused on maintaining the momentum for the rest of 2022,” he adds.

Further to its results statement, PropNex announced that it has expanded its regional footprint into the state of Victoria in Australia, which is its sixth market in the Asia Pacific region.

According to the real estate agency, its team in Victoria has already secured multiple collaborations with reputable builders and developers to market premium locations including the Melbourne CBD, Southbank, Yarra Bend in Alphington, as well as popular promising growth suburbs such as Cranbourne East and North and Pakenham.

“This is an important step for PropNex as we expand our footprint beyond South East Asia. As a mature economy, Australia’s vibrant and well-developed property market will bring many potential opportunities across our PropNex network in Singapore, Indonesia, Malaysia, Vietnam and Cambodia,” Gafoor continues.

“Those who have migrated or are permanent residents call Australia their second home, while Australian universities are highly regarded by international students pursuing their tertiary studies. The Group believes this franchise will bring about valuable synergy across both regions.”

In its outlook statement, the group expects private home prices to increase gradually for the rest of the year, with upcoming launches stimulating price growth.

During the 1HFY2022, the group noted that new private home sales totalled 4,222 units and 7,613 resale properties, which accounted for 64.3% of the overall home sales.

“This reflected not only the limited options in the new launch market but also the preference for move-in-ready resale units among some buyers. Furthermore, the faster pace of price increase in the primary market may also channel some buyers to the resale market, where prices are rising at a slower clip,” reads the statement released on Aug 10.

“While the further increase in interest rates may test the affordability threshold of some would-be buyers with tight housing budget, and potentially take some of them out of the market, we are still relatively optimistic about private home sales this year,” it adds.

In addition, the tight resale HDB flat supply, which fell 3.5% y-o-y to 6,819 resale flats in the 2QFY2022, will prop up prices amid a steady demand from various groups of buyers.

Shares in PropNex closed at $1.68 on Aug 8.

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