PropNex Q3 profit down 15.2% at S$6.1m

Singapore

REAL estate agency PropNex on Wednesday posted a 15.2 per cent plunge in net profit for the fiscal third-quarter from a year ago, as it took in lower commission income, while bearing higher staff costs and depreciation expenses.

Net profit for the three months ended Sept 30, 2019 stood at S$6.1 million, compared with S$7.2 million last year. This translated to earnings per share of 1.65 Singapore cents, against earnings per share of 1.95 Singapore cents a year earlier. No dividend was declared.

Revenue slipped 1.3 per cent to S$122.5 million, from S$124.2 million last year. This was mainly due to a decrease in commission income from agency services, as strong en-bloc activity - before the cooling measures were introduced last July - contributed to high resale activity in 2018. The decrease was partially offset by revenue contribution from project marketing services, attributable to "a significant number" of new launches this year, PropNex said.

Staff costs rose by about S$800,000 or 30.9 per cent to S$3.5 million, mainly due to salary increments, an increase in the average staff headcount, and the accrual of staff bonus on a quarterly basis.

Meanwhile, Ismail Gafoor, executive chairman and CEO of PropNex, noted that the primary private market has "recovered strongly", with private new home sales for September being the third consecutive month this year where sales crossed the 1,000-unit mark. "This was due to an increased number of new project launches in the first nine months, with buyers and investors remaining responsive to new launches that have come on stream," he said.

The group also noted that third-quarter sales performance tends to be better, largely due to the festivities at the beginning of the year, and sales momentum picking up thereafter. PropNex expects sales activities to continue for the remainder of the year, with "momentum and demand staying resilient".

For the overall private residential market, the group anticipates an estimated 18,000 transactions for the whole year, which marks about an 18.7 per cent decline from 2018.

In the public housing market, PropNex noted that the introduction of the enhanced CPF housing grant with broader guidelines in September this year has increased the affordability of homes for first-time buyers. As such, the company expects a higher number of applications by first-time home buyers for resale flats, and for the HDB resale market to reflect "continuous demand and price stabilisation".

PropNex shares closed at 51.5 Singapore cents on Wednesday, down 4.6 per cent, or 2.5 cents.