SINGAPORE (Oct 22): PropNex expects rental, landed and HDB resale segments -- representing 40% of its total revenue -- to stay resilient in the face of cooling measures, says UOB KayHian after a meeting with management.

In good and bad times, PropNex management says renters will continue to rent, providing a recurring income stream to the group while the landed segment is expected to remain resilient as these properties face restrictions on foreign ownership and the HDB resale market, which sees about 20,000 transactions per year, should also remain unaffected due to natural demand.

According to UOB, PropNex led in 16 of the 19 projects marketed to date, closing the largest number of units. This includes 35.7% market share in terms of overall units sold for Tre Ver, 42.2% of Daintree Residences, 35.5% of Park Colonial, 41.5% of Riverfront Residences and 59.7% of Garden Residences.

In a Monday note, UOB lead analyst Loke Peihao says PropNex’s strong showing is testament to the effectiveness of their training programmes, consumer seminars and their largest number of sales agents, "providing more dedicated manpower for the execution of its marketing strategy and capacity to handle higher transaction volumes”.

As at Oct 1, PropNex’s sales force grew by 13.1% ytd to 7,565 agents (vs 4.0% ytd by ERA). Compared to ERA (6,117 agents), PropNex is now 24% larger by agent numbers.

In 9M18, PropNex was involved in 19 launches with 8,779 units. The company also has a strong pipeline of mandates going forward from 2H18/19 with close to 9,843 units. Seven new projects with total of 3,173 units will be lined up for the rest of 2018, and another 10 projects with total of 6,670 units are scheduled for 2019.

According to UOB channel checks, some of the base commissions on launch weekends have increased by 50% on average, compared to that for projects a year ago. Given that projects are competing for the same pool of buyers, developers are increasingly locked into a tit-for-tat in commissions to incentivise agents to bring clients in.

“Maintain buy and target price of $0.65, based on DCF and 10x FY19F earnings with reference to its closest comparable, Apac Realty,” says Loke.

Year to date, shares in PropNex have fallen by 25% to 54 cents.