PropNex Q2 net profit more than doubles to S$16.5m
REAL estate agency PropNex on Wednesday announced net profit of S$16.5 million for the second quarter ended June 30, more than doubling from the S$7.3 million profit for the year-ago period.
This brought net profit for the first half to S$31.3 million, up from S$14.8 million a year ago.
The company has declared an interim dividend of 5.5 Singapore cents per share - the highest since its listing - to be paid out on Sept 3.
Revenue for the quarter jumped 147.2 per cent to S$260.5 million, from S$105.4 million a year ago, on the back of higher commission income from agency services and project marketing services.
In a statement on Wednesday morning, PropNex said the strong growth was due to a higher number of transactions completed in Q2 following improvements in both the Covid-19 situation and the economy.
Earnings per share (EPS) rose to 4.46 Singapore cents in Q2, up from 1.96 cents in the year-ago period. This brings EPS for H1 to 8.47 cents, more than doubling from 4.01 cents a year ago.
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"The residential market has held up well amid the tighter safe management measures under the Phase 2 (Heightened Alert) in May and June. Transaction volumes remained relatively healthy across all market segments, buoyed by optimism in the outlook for the Singapore economy and the relatively low interest rate environment," said Ismail Gafoor, PropNex's co-founder, executive chairman and chief executive officer.
In a company note on Tuesday ahead of PropNex's results announcement, CGS-CIMB had expected PropNex to post "another strong quarter" on the back of "the robust residential market transactions and the low base in H1 2020".
However, PropNex's results beat CGS-CIMB's estimates for Patmi (profit after tax and minority interests) to come in at S$10 million to S$13 million for Q2 and for an interim dividend per share of around 2.7 to three Singapore cents to be declared.
CGS-CIMB had raised the target price for the counter to S$2.05, from S$1.19 previously.
While the research house downgraded PropNex to "hold", from "add" previously, it remains optimistic on the real estate agency's growth potential.
"As its share price has surged 81 per cent since its Q1 2021 results, we believe much of the earnings optimism has been factored into the current share price," said analyst Lock Mun Yee.
"We remain upbeat as we anticipate the company to continue to achieve positive year-on-year earnings momentum," she added.
Looking ahead, Ms Lock said the robust volume of transactions in the first half could drive PropNex's earnings growth in H2 FY2021.
"As buyers complete their purchases, brokerage fees from these transactions are likely to underpin its revenue in H2 FY2021," she explained.
CGS-CIMB is raising its EPS estimates for FY2021 to FY2023 by 15.7 to 33.2 per cent to factor in higher projected contributions from new and resale residential transactions
"We remain positive on PropNex's asset-light business model and believe its attractive projected dividend yield of 4.8 per cent - assuming an unchanged payout of 70 per cent - would be supportive of its share price in the medium term," Ms Lock said.
Shares of PropNex closed flat at S$1.96 on Wednesday, following the results announcement.
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