PropNex - Maybank Research 2022-11-10: Holding Steady; 3Q22 Above Expectations

• PropNex (SGX:OYY)'s 3Q22 PATMI rose 21.9% y-o-y to S$17.6m, beating our and street expectations. This brought 9M22 earnings to S$44.6m (-2.5% y-o-y) and forms about 92% of MIBG/consensus full-year estimates.
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New private home sales to rebound in 2023

• PropNex's revenue for the quarter grew 10.2% y-o-y to S$258.4m, driven by robust turnover from agency services (higher number of transactions completed) but partially offset by decrease in commission income from project marketing services (fewer new launches by developers).
• Gross profit margin narrowed slightly by 0.2ppt to 10.3% due to lower contribution from project marketing services which generally command better margins as compared to agency services’ resale transactions.
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Winning market share despite lower resale volumes

• We forecast a moderation of HDB resale volumes In the wake of fresh cooling measures (introduced on 30 Sep 2022) aimed at reining in the pace of price growth in the public housing segment. This comes on the back of tighter lending curbs and a new 15-month wait-out period for private property sellers looking to downgrade to HDB resale.
• That said, we reckon the strong quarterly performance likely suggests that the group continues to gain market share at the expense of its smaller competitors.
• Indeed, PropNex saw an 11.8% increase in salesforce headcount to 12,065 (as at 2 Nov) from 10,796 salespersons in 1 Jan 2022.

Solid balance sheet with attractive yield of 8%

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Eric Ong Maybank Research | https://www.maybank-ke.com.sg/ 2022-11-10 SGinvestors.io

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