To The Moon

🌟🌟🌟PropNex $PropNex(OYY.SI)$  is Singapore's largest listed real estate agency group with 12,700 sales professionals.  PropNex stands for Property Network for Excellence which is based on its strong commitment to excellence in customer service and professional work ethics.  Propnex's  core business include real estate brokerage, training, property management and real estate consultancy.  Apart from its key market in Singapore, Propnex has expanded its operations regionally in Indonesia, Malaysia, Vietnam, Cambodia and Australia. 

On January 8 2025, Propnex reached its 52 week high at SGD 0.99 per share.  This came on the back of a recent upgrade by DBS to a Buy rating with a new target price of SGD 1.15, an upside potential of 16%.

DBS' analyst said that PropNex earnings are at an "inflexion point" amid a strong pipeline of new property launches for the Singapore property market in 2025.

In determining whether PropNex is a good buy, let's look at its 1H 2024 earnings report.  PropNex reported a net profit of SGD 19 million with revenue dipping by 5.1% to SGD 345.6 million. 

The decline in revenue was primarily due to a 19.6% year on year decrease in commission income from project marketing services, which fell to SGD 91.3 million in 1H2024 compared to 1H 2023.  This drop reflected the reduced number of private home sales amidst fewer launches in the primary market.  In contrast the secondary market showed strength with PropNex's commission income from real estate agency services increasing by 1.3% to SGD 251.9 million in 1H 2024, up from SGD 248.7 million in 1H 2023.

Thr private resale homes segment accounted for 77.4% of total private residential transactions, including new sales, resale and sub sales in 2Q 2024.  During the quarter, this segment experienced a significant 41.4% quarter on quarter increase with 3802 transactions excluding executive condominiums. 

The surge in private resale volume was due to the limited new project launches and a substantial price gap between private new and resale homes.  Similarly transactions for HDB resale flats remained resilient.  In 2Q 2024, 7,352 HDB resale flats were resold, marking a 4.0% quarter on quarter increase from 7,068 flats in 1Q 2024.  For 1H 2024, 14,420 HDB resale flats were resold, reflecting a 6.9% increase from 13,493 in 1H 2023.

In the primary market, developers sold 725 new units in 2Q2024, a 37.7% quarter on quarter decline from 1,164 units in 1Q 2024.  This pullback was largely due to fewer launches, with developers placing 634 units for sale in 2Q 2024, compared to 1,304 units in 1Q 2024.

6,491 private resale  homes were transacted in 1H 2024, 16% more than the 5,598 resold in 1H 2023.  In contrast, only 1,889 private new homes were sold in 1H 2024, marking a 44% decrease from the 3,383 units sold in 1H2023.

Executive Chairman and CEO of Propnex, Ismail Gafoor said that the private resale market has been a standout accounting for 70.9% of overall private residential transactions in 1H 2024.  This is despite the lack of new launches and the impact of Singapore's government property cooling measures. 

Thanks to Propnex robust sales network, Propnex was able to maximise opportunities in the active secondary resale market.  This has helped to cushion the shortfall in the sales of private new home launches. 

Going forward in 2025, PropNex is expected to record strong FY 2025 earnings backed by surging new home sales.  In addition to that, the expected launch of about 15,000 new units in 2025 is double that of 7500 new units launched in 2024.

Sales momentum is likely to continue, driven by pent up demand, moderation of mortgage rate packages from rate cuts and continued strong economic growth.  New home sales are expected to be over 50% higher year over year in 2025 at 9,500 to 10,500 units. 

This would be a key earnings growth driver for PropNex and would boost its net profit.  Resale transactions would also rise 10% to 15% in 2025 due to the spillover effect from new launches. 

What I like about PropNex is its huge cash pile of SGD 116 million with no debt and minimal capital expenditure.  The current dividend yield is 5.9%.  Dividends are paid twice a year in April and August.  The next dividend is due in April 2025.  

This year PropNex will celebrate its 25th anniversary and has hinted that there is a possibility of paying special dividends on this special occasion. 

Singapore is land scarce and a top choice for foreign real estate investment.  This is despite the 60% Additional Buyer's Stamp Duty (ABSD) for foreigners.  Singapore 's role as a business centre, stable political environment and key location in South East Asia attracts many investors.  In the long term, Singapore' s property market is set for stable growth due to its strong economy and role as a global financial hub. 

PropNex has a wide moat due to its well known brand and extensive network of real estate agents.  

I have invested in PropNex since 2022 as I believe that it has strong  fundamentals of profitability, solid balance sheet and a great management team.    Real Estate is fundamental to the Singapore's economy where land is scarce and is a great store of wealth.  PropNex plays  a pivotal  role in helping people find their dream homes and in doing so, will continue to grow exponentially in the future.

Go Long Go Strong Go PropNex! 🚀🚀🚀🌛🌛🌛🌈🌈🌈💰💰💰🇸🇬🇸🇬🇸🇬

@Daily_Discussion  @TigerStars  @Tiger_comments  @Tiger_SG  @TigerClub  @CaptainTiger @MillionaireTiger