APAC Realty Ltd (SGX: CLN), a real estate services provider that operates under the ERA brand name, went public in late 2017. It has three main business segments, namely, real estate brokerage, franchise agreements and training, valuation and other ancillary services.
Earlier this month, the group released its earnings update for the second quarter of 2018. Here are some key highlights from its report:
1. In the second quarter of 2018, revenue jumped 24.2% to S$122.0 million, up from S$98.2 million. Cost and expenses rose 27.4%, resulting in a 4.5% decline in profit before tax. Net profit attributable to shareholders declined 9.3% to S$7.7 million for the quarter.
2. For the six-month period from January to June, revenue increased 37.4% to S$227.3 million, up from S$165.4 million in the corresponding period last year. Profit attributable to owners spiked 8.7% to S$13.6 million.
3. Earnings per share came in at 3.83 Singapore cents for the first half of 2018. This was down 4.7% from the previous year due to higher number of shares after its initial public offering (IPO) on 28 September 2017.
4. Below is a table summarising the revenue and gross profit for the first half of 2018:
Source: APAC Realty Ltd 1H 2018 Press Release
5. The higher revenue for the first half of 2018 was largely due to increase in brokerage income. There was a 34.3% increase in brokerage income from resale and rental properties, amounting to $153.9 million. In addition, there was S$22.4 million or 48.7% increase in brokerage income from new home sales to S$68.5 million.
6. To date, ERA has launched 15 projects in the first seven months of 2018 for a total of 8,625 units. Another 10 projects, amounting to 4,383 units, are due to be launched in the remaining five months of the year.
7. The group has more than 18,000 agents in the region, which gives the company economies of scale and helps it to gain market share for new projects.
8. As of 30 June 2018, APAC Realty had S$61.7 million in cash and zero debt, putting it in a very good financial position. It had a net asset value per share of 39.3 Singapore cents. The group generated S$7.0 million from operation in the first half of the year, while spending just S$42,000 on capital expenditure.
9. Looking ahead, the management warned:
“The Singapore government introduced a fresh round of property cooling measures on 5 July 2018 pursuant to which the Additional Buyer’s Stamp Duty rate was raised and the Loan-to-Value limit was reduced. This will likely affect the underlying demand for residential properties in Singapore. The Singapore property market may also be affected by any adverse global economic conditions and changes in mortgage interest rates.”
10. For the interim period, the group has declared a dividend of two Singapore cents per share. At the time of writing, shares of APAC Realty trades at S$0.585 per piece, which translates to a price-to-book ratio of 1.48, an annualised price-to-earnings ratio of 7.6 and an attractive annualised dividend yield of 6.8%.
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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 writer Jeremy Chia doesn’t own shares in any companies mentioned.