DBS keeps ‘hold’ call on APAC Realty with ‘healthy’ 1HFY2022 but sees slower 2HFY2022

While the quantity of purchases for 1FHY2022 dipped, they were typically transacted at higher prices.

APAC Realty shut at 69 cents on Aug 8, down 2.84% for the day.

DBS, in its Aug 9 note, mentions that there’s a time lag of three to six months prior to profits from deals are reserved. Thus, DBS is expecting a slower 2HFY2022 for APAC Realty.

DBS Group Research has maintained its “hold” get in touch with APAC Realty with an unchanged target price of 67 cents, following a small revenues dip reported by the residential property agency for its 1HFY2022.
The firm, which operates the ERA franchise business, plans to pay an acting dividend of 3.5 cents per share for 1HFY2022, standing for a payment ratio of 75%. Back in 1HFY2021, APAC Realty paid an additional special returns of 3 cents per share.

DBS calls the 1HFY2022 numbers “healthy and balanced”, as the home market has revealed its “resilience” amid global obstacles thanks to strong demand from both international and regional customers.

In the initial 6 months of 2022, the private domestic market in Singapore saw a 30% y-o-y drop in transaction quantity, with the steepest decrease from the higher-margin new homes sector, which was down 40% y-o-y. The HDB resale section additionally saw a 6.1% y-o-y decrease in the exact same period.

APAC Realty’s profits from agenting resale and rental offers dropped for 1HFY2022 however was partially offset by far better new house sales.

“Though need stays strong, exceeding supply, particularly for the brand-new homes segment, this could be partially alleviated by the obstacles of increasing rate of interest, higher rising cost of living and increasing land expense,” includes DBS.

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