In an Aug 11 report, analysts Tabitha Foo and Derek Tan say: “We expect APAC to deliver around 85% CAGR in net profit from FY2024-FY2026, driven by a recovery in new sales transaction volumes from a huge launch pipeline, which typically yield higher margins.”
The believe that the group is also well-positioned to capture market share, retaining its position as the second-largest agency in Singapore after PropNex.
The analysts note that core central region (CCR) projects continue to see healthy take-up despite the 60% additional buyer stamp duty (ABSD) for foreigners, supported by price convergence with rest of central region (RCR) and outside central region (OCR) segments and attractive price quantum, attributed to smaller unit sizes.
With $47 million in cash on APAC Realty’s balance sheet (about 13 cents per share), and a high cash-generative, asset-light business model, Foo and Tan see room for a special dividend, which could be an additional re-rating catalyst for the stock.
See also: OCBC's Lim cuts fair value for SingPost to 49.5 cents
“A repeat of the 3.0 cents special dividend declared in 2021 would imply a highly attractive yield of over 12%,” they add.
“There is upside potential if APAC Realty captures higher-than-expected market share in upcoming launches. As one of the top two property agencies, APAC remains a value play with room for re-rating as it narrows the valuation gap with PropNex,” say Foo and Tan.
As at 2.20pm, shares in APAC Realty are trading 70 cents, 80.8% up ytd.
