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

“Though need continues to be strong, surpassing supply, particularly for the brand-new homes sector, this could be partially alleviated by the difficulties of climbing interest rates, higher rising cost of living as well as climbing land price,” adds DBS.

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DBS, in its Aug 9 note, explains that there’s a time lag of three to six months prior to profits from purchases are reserved. DBS is anticipating a slower 2HFY2022 for APAC Realty.

APAC Realty’s earnings from brokering resale and rental offers went down for 1HFY2022 however was partly offset by much better new house sales.

In the first 6 months of 2022, the exclusive property market in Singapore saw a 30% y-o-y drop in purchase quantity, with the steepest decline from the higher-margin brand-new residences sector, which was down 40% y-o-y. The HDB resale section additionally saw a 6.1% y-o-y decrease in the very same period.

While the quantity of purchases for 1FHY2022 dipped, they were typically negotiated at greater prices.

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

DBS Group Research has kept its “hold” call on APAC Realty with an unmodified target price of 67 cents, following a small revenues dip reported by the property company for its 1HFY2022.
The company, which operates the ERA franchise, prepares to pay an interim dividend of 3.5 cents per share for 1HFY2022, representing a payout proportion of 75%. Back in 1HFY2021, APAC Realty paid an extra special reward of 3 cents per share.

DBS calls the 1HFY2022 numbers “healthy and balanced”, as the residential property market has revealed its “resilience” amid international challenges thanks to solid demand from both international and local customers.