APAC Realty - DBS Research 2021-05-14: Strong 1Q21, Riding On Buoyant Property Market


APAC Realty - Strong 1Q21, Riding On Buoyant Property Market

  • APAC Realty reported strong performance in 1Q21, benefitting from the buoyant property market in Singapore.
  • Strong demand leading to rising prices, while supply is tight with falling stockpile.
  • Slight increase in market share; secured marketing roles for 23 projects.
  • Raised APAC Realty's FY21-22F earnings forecast by 31-38%; maintain BUY with higher target price of S$0.74.

APAC Realty provided 1Q21 business updates, results above expectations.

  • APAC Realty (SGX:CLN)'s total revenue for 1Q21 was up 70% y-o-y to S$153.1m. Net profit surged 114% to S$7.5m, accounts for 40% of our forecast and 44% of consensus, way above expectations. The buoyant property market was partly driven by positive market sentiment, on the back of the low interest rate environment and expectations of a gradual economic recovery, despite the COVID-19 pandemic.
  • New homes revenue jumped 133% to S$54.3m while resale and rental revenue gained 49% to S$96.4m.

Strong surge in transaction volume.

  • The primary private residential market (including Ecs) grew 51% y-o-y to 3,493 units while the resale market more than doubled to 4,607 units. The HDB resale market reported an increase of 29% to 7,581 units.
  • Singapore’s private residential property prices were up by 3.3% y-o-y in 1Q21, steeper than the 2.1% growth in 4Q20.

Reducing stockpile.

  • Total supply of uncompleted private residential units (excluding ECs) in the pipeline with planning approvals in 1Q21 was down 2.4% from 4Q20 to 48,139 units. Unsold units dropped 11.1% from 4Q20 to 21,602 units. Though stockpile is lower, it is still at a healthy level.

Slight improvement in market share.

  • Overall market share for ERA in terms of transaction volume in 1Q21 increased slightly to 28.2%, from 27.5% in 1Q20. New home sales segment fared well, with market share improving to 32.2% from 29.6% in 1Q20.
  • Secured marketing roles for 23 projects. As at 11 May 2021, ERA has secured marketing agent roles in 23 projects for 2021, with a total of 8,745 units. Out of these, 10 projects were launched, with 13 more to be launched during the rest of the year.

Maintain BUY with higher target price of S$0.74.

Lee Keng LING DBS Group Research | https://www.dbsvickers.com/ 2021-05-14
SGX Stock Analyst Report BUY MAINTAIN BUY 0.74 UP 0.610