Promising start to 2018 for APAC Realty

By Samantha Chiew / The Edge Singapore | February 26, 2018 2:05 PM SGT
SINGAPORE (Feb 26): APAC Realty on Friday announced that its 4Q earnings were up by 59.7% to $7.9 million from $4.9 million, bringing FY17 earnings to $25.9 million, 63.1% higher than $15.9 million in FY16.
Revenue for the quarter was 62.5% higher at $129.7 million from $79.8 million last year, driven an increase in real estate brokerage fees and related services.
The group proposed a final dividend of 2 cents of FY17, which translates to an annualised dividend yield of 12% on the IPO price of 66 cents.
Jack Chua, executive director and CEO of APAC Realty, operator of ERA Realty
Hence, RHB is maintaining its “buy” call on APAC Realty with a higher target price of $1.35. The group is also the research house’s top real estate mid-cap pick.
To recap, APAC Realty was one of RHB’s pick following the Budget 2018 announcement, as the group is expected to benefit from the rise of HDB resale transactions following the government’s announcement of higher Proximity Housing Grants (PHGs).
Looking at the group’s results, FY17 earnings exceeded the estimates of RHB and consensus.
The group’s real estate brand, ERA, gained an overall market share of 0.4 percentage points to 37.9%.
In a Monday report, analyst Vijay Natarajan says, “We are heartened to see the market share growth, which came in despite growing competition and a slight reduction in agent count.”
The group’s 2018 outlook seems to be promising, according to Natarajan as ERA has secured agent role for about 20 new launches of about 11,269 units up to 9M18, higher than the total number of units secured in 2017.
“We expect more projects to be added to pipeline in 4Q18 as most of the en-bloc projects sold recently should be ready by then,” says Natarajan.
Meanwhile, the group is looking to expand and deepen its presence into the Indonesian market. The analyst reckons that this could be done through an acquisition of the group’s existing franchise or entering into sub-franchise agreements.
The group also has plans to acquire its own office building in Singapore to consolidate its business and save on rental expenses.
Furthermore, the group is also planning on acquiring other real estate...