Supported by high dividend yield
? 2H/FY21 EPS of 5.16/9.96 Scts in line, at 51.1%/98.5% of our FY21 forecast
? Slower market activity likely in the near term due to cooling measures
? Reiterate Add with a lower TP of S$0.93; share price likely to be supported by high dividend yield
2H/FY21 results highlights
2H21 revenue jumped 71.5% yoy to S$381.3m, led by higher real estate brokerage fees, amid a buoyant property market and 0.7% pt yoy uptick in overall market share to 40.3%. Gross profit rose 55.4% yoy to S$40.2m as GP margin declined to c.10.5% (2H20: 11.6%). 2H net profit surged 111.3% yoy to S$18.3m (EPS: 5.16Scts). FY21 net profit rose 115.3% to S$35.4m (EPS: 9.96Scts). Final DPS of 4Scts brings FY21 ordinary DPS to 7.5Scts.
Strong volume growth drove surge in resale commissions
APAC generated S$449.1m or c.61% of its FY21 topline from commission income from resale and rental of properties. The 88.8% yoy surge in resale segment revenue was achieved through an 81.1% increase in private resale transaction volume and a 24% pickup in HDB resale activity. APAC said that as at end-FY21, it has a market share of 42.6% in resale residential transactions and 41.9% in HDB resale market by volume. APAC expects its transaction volumes for private and HDB resale segments could decline 15-23% yoy in FY22F due to adverse impact from the property cooling measures announced in Dec 2021. It anticipates increases of 1-3% in private property prices and 4-8% in HDB resale prices due to limited new private supply and delays in completion of new HDB apartments.
Higher new project market share, growth strategies put in place
APAC’s brokerage revenue from new home sales surged 141.4% yoy to S$281.3m in FY21 due to a 38.4% pickup in new home sales and improvement in market share to 33.7%. APAC is the marketing agent for c.7k units of housing from ongoing projects and estimates another 7,117 units of marketing inventory coming from new launches in 2022F. In terms of growth strategies, APAC plans to strengthen its presence in Singapore by growing its agent count from its 8,144 agents as at 1 Jan 2022 to >10.8k by 2025F, and increase its market share to 30-50% for residential leasing, private and HDB resale and new home sales segments in the next 3 years. While contributions from its operations in Indonesia, Malaysia, Thailand and Vietnam are still small, the reopening of these economies and their recovery should spur more home buying activity going forward, in our view.
Reiterate Add rating
We cut our FY22-23F EPS by 15.1-17.1% to reflect the slower property transaction environment in FY22-23F. Accordingly, our TP dips to S$0.93, based on an unchanged blend of net cash-adjusted P/E multiple and DCF valuation. While its near-term share price performance is likely to be impacted by the property cooling measures announced in Dec 2021, we believe APAC’s share price is likely to be supported by its projected high dividend yield of 9.6% (based on a 75% payout ratio). Potential re-rating catalysts: ability to further gain market share in both the primary and secondary residential segments. Key downside risk: delayed recovery of the property market due to a weak macro outlook.