• 1Q21 results beat by a large margin. Revenue and PATMI were 40%/51% of our forecasts. Private resales were up the most, by 91% YoY to S$55mn.
• Revenue growth of 63% was led by all segments.
• PATMI almost doubled YoY to S$14.8mn, raising net cash to S$118.9mn (4Q20 S$105.8mn; FY19 S$81.6mn). Operating cash flows were S$13mn.
• BUY maintained with higher DCF TP (WACC 9.8%) of S$1.36, from S$1.00. Our FY21e PATMI is raised 34% to S$41.3mn as we lift revenue by 23%. The buoyant property market implies further upside. That said, we build in a buffer given the recent COVID-19 lockdown and potential property-cooling measures. Yields of 5.7%, S$119mn net cash and 33% ROEs remain PROP’s investment merits.

The Positives

+ Across-the-board revenue spurt. Every category of commission revenue grew, including rental and landed properties. Leading the growth were private resales. The need for larger space and a price gap with new homes drove demand for such units. New home sales were also supported by HDB upgraders.

+ Piling up cash. Net cash broke a new record of S$118.9mn (4Q20: S$105.8mn). This was supported by record earnings and S$13mn of operating cash flows. Curiously, finance income declined 70% YoY to S$94k . Our dividend estimate for FY21e has been raised from 6 cents to 6.5 cents. Annual payout of S$24mn should be well covered by operating cash flows of S$40mn and net cash.