SINGAPORE (Sept 12): UOB KayHian is starting coverage of real estate agency PropNex with a “buy” and target price of 65 cents or 10 times FY19 forecast earnings given negatives from the recent cooling measures have been priced in.

“We believe it is a low-risk proxy to Singapore property with a future-proof business model. Leveraging on its strong brand equity, PropNex has also expanded regionally,” says lead analyst Loke Peihao in a Wednesday report.

PropNex, which has 7,512 agents as at Sept 10, has dominant share of 43.8% in the residential private market in 2017 in terms of transactional value and 45.8% of the stable HDB resale market in 2016.

Compared to developers who face huge capital outlays on land bidding and construction, development risks and holding costs, PropNex offers a more asset-light approach to Singapore property.

Furthermore, the cooling measures announced on July 5 have constrained developers in terms of their new launch pricing, resulting in thinner margins.

Read more on The Edge Singapore