SAC Capital analyst Tracy Lim has upped her target price for PropNex from $1.27 to $2 in an August 27 research note.
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Her higher target price is based on a P/E multiple of 13.8 times, which is one standard deviation above FY2021 P/E, reflecting the strong momentum of the property market that’s expected to continue in the near term.
“We expect home prices to remain resilient with higher developer costs that will translate to higher property prices, more HDB upgraders and long waiting times for BTO flats,” she says. In addition, property investments by high-net-worth individuals due to Singapore’s “safe-haven” status are also expected to contribute to the increase.
“The low inventory of unsold private residential units in the market is, however, a double-edged sword,” she cautions.
PropNex reported its 1HFY2021 ended June results on August 11, with earnings making up 82.4% of Lim’s FY2021 forecasts, beating her expectations.
Following the “strong set” of results, she has tweaked her FY2021 revenue estimates up by 28.8%, while her earnings forecast for the year increased by 40.8% to $53.6 million. She also introduced her FY2022 forecasts.
Nonetheless, she has kept her “hold” call on PropNex unchanged, as she believes the market has priced in PropNex’s strengths. “We are cautious about i) possible property cooling measures; ii) strong growth rate might not sustain; and iii) dwindling supply in the pipeline and fewer new launches expected pointing to lower transaction volume next year,” she adds.
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As at 4.54pm, shares in PropNex are trading down 4 cents or 2.08% lower at $1.88.
Photo: Samuel Isaac Chua/The Edge Singapore