Shares of PropNex Limited (“PropNex”) (SGX:OYY) have been on a tear, surging over 145% year to date, as Singapore sees a buoyant property market following the easing of Covid-19 restrictions as more of the population gets vaccinated.
The group has recently announced its results for the second quarter ended on 30 June 2021 (“2Q2021”). In this article, we will delve into the group’s latest earnings to check on its recent business performance and also share some of the group’s latest corporate developments.
1. Impressive top and bottom-line growth
PropNex reported a jumped in net profit after tax of 134.5% year-on-year to S$18.2 million in 2Q2021, on the back of a 147.2% growth in revenue over the same comparative period.
The strong growth in both the top and bottom lines was a result of a higher number of transactions completed in 2Q2021 following improvements in both the Covid-19 situation and the economy.
According to data from the Urban Redevelopment Authority and the Housing and Development Board, overall private home prices rose for the fifth consecutive quarter and the HDB 2Q2021 resale price index is just 2% below its peak in 2Q2013.
As a dominant market player in private new launches and public housing, the group transacted the most units in the second quarter among competing marketing agencies appointed by developers for most of the projects previously launched.
2. Strong balance sheet with a net cash position
PropNex continued to be debt-free and its balance sheet remains strong with cash and cash equivalents of S$120.7 million as of 30 June 2021, compared to S$99.7 million as of 30 June 2020.
Meanwhile, the group generated positive operating cash flows of S$20.2 million in 2Q2021, as compared to approximately S$11.9 million in 2Q2020.
3. Interim dividend of S$0.055 per share
The board has declared an interim dividend of 5.5 Singapore cents, representing an annualised yield of 5.9% on the price of S$1.85 per share on 3 August 2021, its highest since listing. The interim dividend will be paid to shareholders on 3 September 2021.
4. Home launches and demand remain strong
PropNex is optimistic that transactions this year will surpass the figures garnered in 2020. The group is projecting around 11,000 to 12,000 new private residential units (excluding executive condominiums) and 16,000 resale units to be transacted. This represents a 10% – 20% increase for new units and a nearly 50% jump in resale units compared with last year.
PropNex projects private home prices could rise by 6% to 7%. Additionally, the dwindling unsold stock of new units will contribute to price stability. This combination of higher volumes and rising prices bodes well for the group. Furthermore, the group has been appointed as the agent for another 15 projects to be launched in the second half of 2021, with around 3,718 units lined up.
5. Expanding brand presence in Cambodia
On 19 May 2021, PropNex announced an expansion into its fourth overseas market, Cambodia, bringing its total salesforce to over 12,000 regionally, across five countries – Singapore, Cambodia, Indonesia, Malaysia and Vietnam.
PropNex Cambodia marked a solid start, having cemented collaborations with reputable developers, such as Urban Village by Hong Kong developer Urban Hub (Cambodia) Co. and D’Seaview by Hong Lai Huat Group Limited. It currently has a salesforce of close to 500 salespersons with headquarters in Phnom Penh and branch offices in Siem Reap and Sihanoukville.
6. Partnership with Tiger Brokers and SingCapital
PropNex, Tiger Brokers (Singapore) and financial advisory firm SingCapital have announced a partnership that will see the real estate agency collaborating exclusively with the trading platform.
As part of the partnership, Tiger Brokers will contribute up to S$240 worth of PropNex stock vouchers to the PropNex “community” – which includes its salesforce, staff, clients and retail investors – who are on-boarded with its trading platform Tiger Trade.
A series of webinars will also be organized together with SingCapital to empower its community with the necessary investment knowledge.
Near term outlook
The property market is set to remain buoyant for now owing to low interest rates globally as many countries seek to re-start their sputtering economies. As central banks worldwide have printed lots of money to help prop up businesses, it is unavoidable that money will flow into real estate in seek of higher returns.
Meanwhile, Singapore’s central bank, the Monetary Authority of Singapore (MAS), is keeping a close watch on property prices. Thus far, the conclusion is that the property market is not overheated and nothing needs to be done at the moment. Ravi Menon, MAS’s managing director, has remarked that he hoped “the market will continue to remain stable and that we don’t have to make any moves”.
These conditions would benefit PropNex in the short and medium-term.