+ Strong market share gains. FY22 was a banner year for PropNex. Despite the drop in primary and secondary transaction volumes by 23% and residential leasing being down by 8% in 2022, revenue grew 8% to a record S$1bn. We believe there were market share gains, especially against the smaller agencies. A key differentiator has been their sales process and continuous efforts in engaging consumers that pivoted to the other segments, as primary sales were sluggish due to the collapse in new launches.
+ As expected, ample cash flow. FCF generated in FY22 was S$48.7mn (FY21: S$80mn). There was higher working capital of S$23mn tied up with receivables than a year ago. PropNex ended FY22 with net cash of S$138mn (FY21: S$145mn). The current dividend is around S$50mn p.a., well supported by annual operating cash flow and net cash.
– Timing in recognition of commission. In 4Q22, PropNex made an impairment loss of S$5.5mn on receivables. The net impact on the income statement is offset by S$4.1mn derecognition of trade payable to agents. PropNex makes an impairment of its trade debtors for commissions not paid within 365 days. Two developers hit their 5% marketing fees limit. Both developer projects have been fully sold and the commission will be repaid when the projects reach their temporary occupation permit or completion.