APAC Realty - CGS-CIMB Research 2022-10-03: Hitting A Speed Bump

APAC Realty - Hitting A Speed Bump

  • We tweak down our private resale market volume transaction assumptions for APAC Realty (SGX:CLN) in FY22F/FY23F to -30%/0% y-o-y from -28%/+2% y-o-y as well as project HDB resale transactions to shrink by 10% y-o-y in FY23F as we think market activity could cool in the near-term. Accordingly, our FY22-24F EPS forecasts for APAC Realty are lowered by 3.32-5.86%.
  • We maintain our assumption that APAC Realty would maintain its current market share of 41.9% and 41.8% share of the private and HDB resale markets, respectively, as at 1H22.
  • We think that raising the floor interest rate for TDSR computation could dial down affordability by 5-6%, thus impacting marginal buyers. That said, the wait-out period for private property owners before they can purchase HDB resale units may push demand for rental apartments in the near-term. We believe the slower market activity could likely impact property brokers’ commission income stream in the near-to medium-term. (Refer to the property cooling measures announced in MAS-MND-HDB joint press release on 30 Sep 2022.)
  • That said, APAC Realty has continued to diversify its business with the establishment of its Capital Markets & Investment Sales (CMIS) business unit, which engages high net-worth investors, family offices and institutional investors with services related to commercial, industrial and other segments, which has garnered good traction since it was established in Feb 2022.
  • In addition, APAC Realty has presence in other regional markets such as Indonesia, Thailand, Malaysia and Vietnam. This will likely enable the group to ride on any market recovery in these markets.
  • Following our earnings revision, we lower our target price for APAC Realty to S$0.77, based on an unchanged blend of net cash-adjusted P/E multiple and DCF valuation. We believe APAC Realty's share price is likely supported by a projected FY22F dividend yield of 8.9%, based on an assumed 75% payout ratio. See APAC Realty's dividend history.

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.

LOCK Mun Yee CGS-CIMB Research | https://www.cgs-cimb.com 2022-10-03
SGX Stock Analyst Report ADD MAINTAIN ADD 0.77 DOWN 0.840

Previous report by CGS-CIMB:
2022-08-10 APAC Realty - Supported By High Dividend Yield

Target prices by 2 other brokers at APAC Realty Target Prices.
Listing of broker reports at APAC Realty Analyst Report.

Relevant links:
APAC Realty Share Price History,
APAC Realty Announcements,
APAC Realty Dividends & Corp Actions,
APAC Realty News Articles


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