PROPNEX LIMITED (SGX:OYY)
PropNex - Bullish Update With Earnings Momentum To Continue Into 2022
- PropNex (SGX:OYY) provided a bullish near to medium term update on its business and earnings prospects at the Asian GEMS conference. It does not believe that 2021 will be its peak earnings and that over the next few quarters, it will be able to maintain its recent earnings momentum given its market share increases.
- Maintain BUY.
PropNex presented a bullish update of its prospects at our Asian GEMS conference.
- With the Singapore property market still in robust shape in 3Q21, and the government unlikely to implement cooling measures in the medium term, PropNex presented a bullish picture of its prospects at our Asian GEMS conference. In particular, the company expects to close out 2021 with 10,000 property agents and potentially moving to 11,000 in 1H22, solidifying its position as the market leader in the industry.
- For its upcoming 3Q21 business update in mid-Nov 21, we expect PropNex to report continued strong transaction volumes from all of its business segments. Given the time lag between property transactions and actual recognition of revenues and profits, we expect PropNex to continue generating strong results into at least 2Q21. Note that as of 1H21, PropNex has moved to half-yearly reporting of its financial results.
PropNex does not expect cooling measures in 2021.
- PropNex's management stated that with the various cooling Singapore’s home prices is too low for the government to implement any cooling measures.
Dividend payout policy may be announced soon.
- With PropNex having declared a much to a full-year dividend of S$0.12 per share.
Continued decline in inventories of unsold private homes presents PropNex with opportunities.
- PropNex’s management highlighted that unsold private homes have declined for 10 new en bloc sales team headed by its founder and CEO Mr Ismail Gafoor.
En bloc earnings will present upside to PropNex's earnings in 2022.
- During the client presentation, PropNex highlighted 7 en bloc projects that it currently has in Hoe Chiang Road, and residential properties Jansen Mansions, Lakepoint Condo, Balestier Regency, Lakeside Apts, Faber Garden, The Dairy Farm. As a result, we believe that this could underpin PropNex’s earnings growth in the next 12-18 months, which we have not factored in at present.
Maintain BUY rating on PropNex
- We maintain our BUY rating on PropNex with an unchanged PE-based target price. Our target PropNex still appears inexpensive trading at 2022 P/E of 12.9x and 5.9% yield.
- See
- Share price catalysts:
- Continued positive newsflow on private and HDB resale volumes.
- Moderation in level of conversion of its S$4.4b worth of en bloc projects currently in hand.
Adrian LOH
UOB Kay Hian Research
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https://research.uobkayhian.com/
2021-10-18
SGX Stock
Analyst Report
1.970
SAME
1.970
