PropNex Q4 profit soars 90.5% on higher commission income

REAL estate agency PropNex OYY on Thursday (Feb 24) posted a net profit of S$14.3 million for the fourth quarter of the financial year ended Dec 31, 2021, up 90.5 per cent year on year from S$7.5 million.

Earnings per share for the period therefore also increased by a similar 90.1 per cent to S$0.0386, from S$0.0203 in Q4 FY2020.

The profit comes as revenue for the 3 months went up to S$242 million, up 56.1 per cent on-year from S$155.1 million, following a boost to the agency's commission income for the quarter.

In its financial results, the group observed that the larger Q4 commission income, which included an increase of S$35.9 million from agency services and an increase of S$52.2 million from project marketing services, was driven by a higher number of transactions for the period due to improvements in the Covid-19 situation and the economy. (see amendment note)

The board is proposing a final dividend of S$0.07 per share, its highest final dividend payout since listing and up from S$0.04 per share in the previous year.

Together with an interim dividend of S$0.055, this brings PropNex's total dividend to S$0.125.

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For the full FY2021, revenue jumped 86.5 per cent to S$957 million, from S$513.5 million in the year-ago period, which the group attributed to higher commission income and increased transactions from improving economic and Covid-19 conditions.

In particular, PropNex highlighted that full-year commission income from agency services grew by S$227.9 million to S$519.2 million, while commission income from project marketing services grew S$216.8 million to S$435.5 million for FY2021. (see amendment note)

The nearly S$1 billion revenue figure comes after the agency said on Feb 21 that while commissions relating to property transactions carried out by its salespersons in 2021 had exceeded S$1 billion, that does not necessarily translate to an equivalent full-year revenue, in response to bourse operator Singapore Exchange queries.

The queries had been submitted following feedback that PropNex chairman and chief executive officer Ismail Gafoor had, in a private event, disclosed to its property agents that the group's full-year commission for 2021 had crossed S$1 billion.

Its net profit for the full year was S$60 million, up 106.4 per cent year on year from S$29.1 million.

This therefore translated to a FY2021 earnings per share of S$0.1622, also up 106.4 per cent year on year from S$0.0786.

Commenting on the group's outlook, Gafoor, who is also PropNex's co-founder, said the company is gearing up for "the next growth trajectory" as it cements its position as "the preferred real estate agency for career development among new and experienced salespersons".

"Also, our strategic foray into the Good Class Bungalow segment with the latest senior appointment of Henry Lim to lead our prestige landed division will allow us to capitalise on new opportunities in this area," he added.

As for the market outlook, Gafoor noted: "The latest market data reflects the ongoing healthy demand for new homes, amidst a declining supply of unsold inventory."

The group believes the government's move to introduce the new cooling measures on Dec 16, 2021 will moderate the fast-accelerating price growth, after noting the robust price increase in both Q4 and the overall 2021.

It also projects that private home transactions may taper to 9,000-10,000 and resale property sales to 15,000-16,000 for resale properties in 2022.

Meanwhile, it retains its forecast of 30,000 HDB resale transactions for 2022 in anticipation of healthy underlying demand for resale flats and the bumper stock of flats that are due to exit the 5-year minimum occupation period in 2022.

Shares of PropNex closed at S$1.82, up 4 per cent or S$0.07, on Wednesday.

READ MORE:

• Brokers' take: Analysts remain optimistic of PropNex after its Q3 results
• PropNex terminates master franchise agreement in Vietnam but will maintain single franchise there
• Budget 2022: Property tax rates for homes to rise from 2023, analysts don't expect demand to dampen

Amendment note: The article has been edited to correctly reflect the increases in commission income from agency services and project marketing for Q4 FY2021.

Amendment note 2: The article has been edited to correctly reflect the increases in commission income from agency services and project marketing for FY2021.