As of May this year, new home sales, excluding executive condominiums, jumped by 168%.
PropNex typically commands a significant market share in helping developers move new projects.
Given how revenue recognition of brokerage fees is recognised up to 3 months after the sale, PropNex is set to report this spike when it reports its 1HFY2025 ended June results.
Noting that this bullish projection is already factored in, Chew is keeping his FY2025 earnings projections for now but says there's potential upside to his forecast.
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"We believe the sentiment for new launches remains healthy and is supported by low interest rates," he says.
Chew adds that PropNex trades at an attractive dividend yield of 6.1%. The absolute payout of some $48 million per year is backed by the company's annual free cash flow of $64 million and net cash and fixed-income securities of $152 million.
Possible catalysts for the industry include the relaxation of foreign buyers' additional buyer's stamp duty, and the reduction of the wait-out period for downgraders.
PropNex shares changed hands at $1.06 as at 9.50 am.
