Real estate agency PropNex posted earnings of $6.8 million for the 3QFY2020 ended Sept 30, some 10.6% higher than earnings of $6.1 million a year ago.
The higher earnings brought earnings per share (EPS) to 1.83 cents for the quarter from the 1.65 cents posted in 3QFY2019.
According to the group, its performance for 3QFY2020 was “firmly led” by strong domestic demand in both the private residential and public housing segments, which was possibly due to buyers’ confidence in the recovery of Singapore’s economy.
“Buyers with funds are keenly looking to enter the residential market to take advantage of relatively attractive pricing by developers and the low interest rate environment,” it says.
The higher figures were also due to PropNex’s further dominance as the market leader in new launches, as well as in the private and HDB resale segments, despite the ongoing safe distancing measures and restrictions on mass gatherings during the quarter.
The group says it transacted the greatest number of units in the quarter among competing marketing agencies appointed by developers for most of the projects launched.
3QFY2020 revenue fell 3.3% y-o-y to $118.5 million mainly due to the lower commission income from agency services of $10.0 million due to the circuit breaker measures. This was partly offset by the increase in commission income from project marketing services of some $6.6 million driven by the higher number of transactions made during the quarter.
Cost of services fell 3.8% y-o-y to $105.2 million in line with the lower revenue.
Gross profit, as such, was up 0.9% y-o-y to $13.3 million due to higher contribution from project marketing services.
Other income was up 32.2% y-o-y to $1.6 million mainly due to the government grants of some $0.4 million from the Jobs Support Scheme (JSS).
“The real estate market has outperformed expectations time and again in recent months. Notably, in September, we saw 1,329 new private homes (excluding Executive Condos) transacted, marking the highest monthly sale in more than two years. This was also the fifth straight month of increase in terms of transactions in the new launches segment,” says Ismail Gafoor, co-founder, executive chairman and CEO of PropNex.
“We observed that there is a sizeable pool of genuine buyers, HDB upgraders and investors, who are still keen to enter the market to take advantage of the relatively attractive pricing, especially in the current economic situation. The market has had time to absorb the shock from the initial insurgence of the COVID-19 pandemic in January 2020… Buyers right now probably have greater visibility on the potential challenges and opportunities ahead and are in a better position to make an informed decision,” he adds.
Earnings for the 9MFY2020 was up 82.8% y-o-y to $21.6 million, translating to EPS of 5.84 cents.
Revenue for the period increased 24.6% y-o-y to $360.0 million mainly due to the higher commission income from project marketing services of some $81.7 million driven by the higher number of transactions completed in the nine-month period.
Cost of services was up 23.0% y-o-y to $319.1 million on the increase in commission paid to salespersons.
Consequently, gross profit was up 39.1% y-o-y to $40.9 million.
Other income for the period rose 23.3% y-o-y to $5.4 million mainly due to the increase of government grants amounting to some $1.4 million from the JSS and property tax rebate from landlords.
As at Sept 30, cash and cash equivalents stood at $94.7 million.
“With Covid-19 measures likely to extend into 2021, the Group firmly believes that digital tools, such as virtual showflats, will continue to serve as an additional touchpoint for developers and salespersons to connect with potential buyers. We launched this industry-leading initiative, to bring to home buyers a richer virtual viewing experience that is both engaging and immersive, as if they were physically there and yet, is extremely convenient for them and without the health risks,” adds Gafoor.
Shares in PropNex closed flat at 69.5 cents on Nov 11.