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APAC Realty Ltd’s 2017 Earnings: Robust Growth Overall

APAC Realty Ltd (SGX: CLN), which went public in September 2017, is a real estate services provider with three main business segments – real estate brokerage services; franchise agreements; and training, valuation, and other ancillary services. The real estate brokerage services segment is operated by its wholly-owned subsidiary, ERA Realty Network Pte Ltd, one of Singapore’s largest real estate agencies.

At the end of last month, APAC Realty announced its financial results for the full year ended 31 December 2017. Here are 10 things investors should know from the earnings announcement:

1. Revenue for 2017 improved by 39.2% year-on-year to S$400.6 million. The increase was due to higher brokerage income from resale and rental of properties, and new home sales. Growth in business conference income and bank referral fees also helped to prop up the top-line.

2. Total expenses rose 37.7% to S$371.2 million. The costs included allowance for doubtful debts provided, which jumped 140% year-on-year to S$2.6 million. Investors should monitor the situation to see if it improves going into 2018. One-off initial public offering (IPO) expenses were S$1.2 million.

3. Net profit surged 63.1% to S$25.9 million.

4. Earnings per share (EPS) grew 57.1% year-on-year to 8.03 Singapore cents.

5. The net profit margin for 2017 stood at 6.5%, an improvement from 5.5% seen a year ago.

6. As at 31 December 2017, APAC Realty had S$62.0 million in cash and bank balances with no debt. This is a vast improvement from a year ago where it had S$17.7 million in cash and bank balances, and S$18 million in total debt.

7. Return on equity for 2017 was 19.5%, down slightly from 20.1% in 2016, but still respectable.

8. Cash flow from operations soared 52.7% to S$34.6 million. With capital expenditure coming in at S$0.5 million, free cash flow climbed to S$34.2 million in 2017 from S$22.5 million in 2016.

9. A final dividend of 2.0 Singapore cents per share has been declared. According to its IPO prospectus, the firm intends to dish out dividends of at least 50% of its net profit after tax (without one-off items) for the period from the listing date to 31 December 2017, and for 2018. With the fourth quarter EPS at 2.22 Singapore cents, the dividend payout ratio comes to 90.1%.

10. Looking ahead, the real estate services provider said:

“The Singapore residential property market is expected to remain active as the underlying demand for residential properties is likely to remain strong and current mortgage interest rates remain attractive. However, this may be affected by any adverse global economic conditions and changes in mortgage interest rates.”

APAC Realty shares last changed hands at S$1.22 yesterday. This translates to a price-to-earnings ratio of 15.2 and a dividend yield of 1.6%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.