APAC REALTY LIMITED (SGX:CLN)
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.
- We project the transaction value for the overall property market to grow by a strong 27% in FY21F and another 3% in FY22F. This is revised up from our previous assumption of 6.5% in FY21F and 6.6% in FY22F, after 14% growth in FY20. Factors that can drive market activities include the low interest rate environment, healthy supply of projects, expectations of a gradual economic recovery and healthy housing demand.
- On the back of higher transaction value assumption, we have raised APAC Realty's FY21/FY22 earnings forecast by 38%/31%.
- Our target price for APAC Realty is increased to S$0.74 (previously S$0.61), pegged to average 5-year P/E of ~10x on FY21 earnings.
- See
- Maintain BUY call on APAC Realty.
Lee Keng LING
DBS Group Research
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https://www.dbsvickers.com/
2021-05-14
SGX Stock
Analyst Report
0.74
UP
0.610
