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Analysts maintain 'buy' call for Propnex despite second quarter earnings slippage

Bryan Wu
Bryan Wu8/12/2022 02:09 PM GMT+08  • 5 min read
Analysts maintain 'buy' call for Propnex despite second quarter earnings slippage
Analysts from UOB Kay Hian and CGS-CIMB Research have maintained their “buy” calls and target prices for PropNex
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Analysts from UOB Kay Hian and CGS-CIMB Research have reiterated their “buy” calls for PropNex, each maintaining target prices (TPs) of $2.07, even as the company reported year-on-year (y-o-y) declines of 11.4% in revenue and 15% in gross profit for the 2QFY2022 ended June.

Slower project marketing revenue, partly offset by higher agency services revenue, saw PropNex post a revenue of $230.7 million and gross profit of $23.7 million for the quarter, with gross profit margins slipping to 10.3%, notes CGS-CIMB’s Lock Mun Yee, whose TP is based on a blend of net cash-adjusted P/E and discounted cashflow (DCF) valuation. PropNex is trading at a cash-adjusted FY2022 P/E of 10x.

Lock writes: “For FY2022, management expects homes sales in Singapore to drop 30% to 40% y-o-y due to the impact from the property cooling measures announced in Dec 2021 and dwindling unsold inventory. That said, management indicated that it anticipates private home prices in Singapore to rise 7% to 8% in 2022 due to limited new launch supply.”

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