APAC Realty - DBS Research 2023-08-16: 1H23 Results Weak, Steep Drop In Margins

• APAC Realty (SGX:CLN)'s 1H23 net profit plunged 70% y-o-y to S$5.0m on the back of a 24% drop in revenue to S$259.6m. Revenue from resale and rental properties declined 8.2% y-o-y to S$182.7m while revenue from new home sales plunged 47.4% to S$73.3m.
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• An interim dividend of S$0.011 was declared (vs. S$0.035 in 1H22), representing a dividend pay-out ratio of 78%, and in line with the group’s dividend policy of distributing 50%-80% of profits as dividends on a semi-annual basis. See APAC Realty's dividend dates.

Steep drop in net margins.

• Gross margin eased to 10.2% (from 10.3% in 1H22 and 10.5% in 2H22). This caused net margin to tumble to 1.9% in 1H23 (vs. 4.9% in 1H22 and 2.7% in 2H22).
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Property transaction volume in 1H23 declined y-o-y across all segments.

• Following the cooling measures rolled out by the authorities in April 2023, 1H23 saw a drop in transactions. In 1H23, developers in Singapore sold 3,646 private residential units (including ECs), a decline of 19.8% y-o-y, primarily due to a lower number of new home launches.
• The private residential resale market recorded sales of 6,126 units, a decline of 22.8% y-o-y.
• The HDB resale market also recorded a decline of 1.9% y-o-y.

Dip in private home prices; HDB resale saw moderate increase.

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Lee Keng LING DBS Group Research | https://www.dbs.com/insightsdirect/ 2023-08-16 SGinvestors.io

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