PropNex - UOB Kay Hian 2023-08-11: 1H23 Weakness Belies Potentially Strong Back-End Loaded 2H23

• PropNex’s 18% y-o-y decline in 1H23 PATMI was due to the dearth of new property launches as well as timing of revenue recognition. On our estimates, this will be made up for in 2H23 as a result of the strong pipeline of 33 new launches, amounting to 8,000 units which is twice the number launched in 1H23.
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A weak 1H23...

• While PropNex (SGX:OYY) reported 1H23 net profit that appeared to fall short of expectations, with PATMI falling 18% y-o-y to S$22m, we highlight that we expect 2023 to be back-end loaded given the accelerated pace of new launches in 2H23. Specifically, slightly more than 70% of 2023’s new launches will occur in 2H23.
• For 1H23, the lower numbers of new launches in 1H23 resulted in project marketing revenue declining 38.1% y-o-y. The private resale market also had slowed down with transaction volume down 19.9% y-o-y to 3,383 units.
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… that will be made up for by the strong pipeline of new launches for 2H23.

• PropNex stated that with a large pipeline of 33 launches lined up for 2H23 numbering >8,000 units (1H23: 3,529 units), its results will be back-end loaded. Given the timing of recognition of units sold between Mar-May 23, its 3Q23 results should be strong too.
• On a full-year basis, there will be >11,500 new units launched in 2023 which is 1.5x more than the 4,528 units launched in 2022. In addition, management expects the private resale market to pick up in 2H23 as it is a seasonally peak period for the home rental market.

Sticking to its expectation for 5-6% y-o-y growth in HDB prices.

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Adrian LOH UOB Kay Hian Research | https://research.uobkayhian.com/ 2023-08-11 SGinvestors.io

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