PropNex Ltd – Reinforcing another record year May 17, 2021 638

PSR Recommendation: BUY Status: Maintained
Target Price: 1.360
  • 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.

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About the author

Profile photo of Paul Chew

Paul Chew
Head of Research
Phillip Securities Research Pte Ltd

Paul has 20 years of experience as a fund manager and sell-side analyst. During his time as fund manager, he has managed multiple funds and mandates including capital guaranteed, dividend income, renewable energy, single country and regionally focused funds.

He graduated from Monash University and had completed both his Chartered Financial Analyst and Australian CPA programme.

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