Still adjusting to cooling measures
- 9M23 below expectations; margins still weak
- Transaction volume declined for all segments; smaller gain in 3Q23 price index for both private and HDB
- Revised down earnings for FY23F by 16% on lower assumption for new home sale transactions in 2023
- Maintain HOLD with TP of S$0.53
9M23 below expectations; margins still weak. 9M23 revenue dropped 23% y-o-y to S$405.5m while net profit plunged 68% to S$7.6m. Net margin of 1.9% pales in comparison to the 4.6% in 9M22. For 3Q23, the group registered net profit of S$2.6m (-65% y-o-y, +29% q-o-q) on the back of the 20% y-o-y (+5.5% q-o-q) decline in revenue to S$145.9m. 3Q23 net margin of 1.8% is slightly better than the 1.5% in 2Q23 but much weaker than the 4.1% registered in 3Q22. Overall, 3Q23/9M23 earnings account for 22%/63% of our forecasts, below expectations.
Transaction volume declined for all segments except EC; rental market mixed. For the 9M23 period, both new homes (except EC) and resales saw a decline in transaction volume, on the back of the macro uncertainties, cooling measures, and higher interest rate environment. For the rental market, the HDB segment recorded a 6% increase, but the private segment saw a 8.7% dip as compared to 9M22.