DBS Group Research has upgraded its calls on PropNex and APAC Realty to “buy” from “hold” as both counters are tipped to benefit from a strong pipeline of new launches in 2025.
PropNex is the largest property agency in Singapore with around 12,000 agents accounting for 34% of the country’s market share. APAC Realty is one of the leading players in the real estate brokerage industry. It has a presence in 17 Asia Pacific (APAC) countries and one of the largest brand footprints in Asia through its ERA franchise network.
“We anticipate a rebound in overall volumes in 2025, driven by new sales returning to [around] 8,000-8,500 units annually. This is supported by stable property prices, with fluctuations expected in the range of +1% to +2%,” say Derek Tan and Tabitha Foo in both reports dated Jan 6.
The rebound will largely be driven by three main factors: lower mortgage rates; homeowners, upgraders and permanent residents buying homes for themselves; as well as the introduction of a wider array of projects with strong attributes.
In 2025 to 2026, the analysts also see private resale transactions remaining “stable” at 13,500 to 14,000 units. Sell-through rates could average between 30% to 50% during launch weekends, which could support a gradual turnaround in profitability for both agencies.
“The group’s market share in private new sales and resale has increased to 56%-60%, significantly higher than pre-pandemic levels,” note Tan and Foo for PropNex specifically, adding that these figures indicate that one in every two sales is made by a PropNex agent. With this in mind, a potential increase in market share as PropNex adds to its sales force, would present upside potential to the analysts’ estimates.
See also: DBS remains ‘neutral’ on Singapore stocks with 2025 STI target of 3,950 points
Tan and Foo have increased their target price estimates for both PropNex and APAC Realty to $1.15 and 50 cents from 95 cents and 48 cents respectively.
Their new target price for PropNex is pegged to 15 times the company’s P/E on rolled-forward and revised FY2025 earnings. PropNex’s FY2025 earnings estimates were lowered to account for lower overall sales and margins assumptions.
“We have moved the multiple towards +1 standard deviation (s.d.) (versus [a] five-year average of 12 times), as the market and the company’s profitability are at an inflexion point,” the analysts write. “[PropNex’s] FY2025/FY2026 dividend yield of 7.7% (80% payout ratio) is attractive, with potential upside if the group decides to distribute its cash reserves (16 cents per share) to shareholders.”
Meanwhile, APAC Realty’s new target price represents a higher P/E multiple of 13 times in line with its four-year historical average on rolled-forward FY2025 earnings.
As at 11.57am, shares in PropNex and APAC Realty are trading at 95 cents and 39.5 cents respectively.
