+ New homes sales revenue the anchor for growth. Commission revenue from new launches rose 16% YoY in 1H20. It was the fastest-growing revenue segment for the company.
– Interim dividend unchanged. Despite the improvement in earnings, the interim dividend was kept unchanged. Despite the rebound in property transactions in July and August, concerns remain whether the weak economy will hurt buying sentiment in 4Q20.
2H20 will bear the brunt of the lockdown especially new home sales and resale. There was no viewing of units from 7 April to 19 June. Another S$0.7mn from JSS grant can be expected in 2H20. A positive has been the company efforts to expand more aggressively the ERA model into SE Asia, such as Malaysia, Indonesia and Vietnam. This will lay the foundation for future growth outside Singapore.
Downgrade to NEUTRAL from ACCUMULATE with a lower target price of S$0.365 (prev. S$0.55)
We are lowering our recommendation due to the weaker than expected results and reducing our earnings estimates for FY20e and FY21e.