APAC Realty Ltd (SGX: CLN) is Singapore’s second-largest real estate brokerage company. In the first half of 2019, the headline numbers for the firm were not pretty. Revenue and earnings per share fell 28.2% and 62.4% respectively. Additional property cooling measures put in place last year was a contributing factor to the lower number of private resale transactions so far this year. However, there could be a slight improvement in the second half of 2019. Here’s what shareholders should expect over the next six months.
New project launched in the second half of 2019
Although resale volume was nearly 50% lower in the first half of 2019, new project launches in the second half of 2019 can help to boost the company’s fortunes in the latter part of the year.
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The real estate brokerage firm has been appointed marketing agent for 42 projects in 2019, with 26 of these expected to launch in the second half of the year.
The bigger base could make up for the anticipated slower take-up rates.
Higher commission rates
According to analysts’ reports, due to the large supply coming on board, developers are also likely to offer higher commission rates for some of their projects. Commission rates are expected to be between 3% and 3.5% compared to between 1.5% and 2% in the past.
The higher commissions are in a bid to move the large unsold supply, with developers trying to clear their older projects. As of 30 June 2019, the total number of unsold private residential units (including executive condominiums) increased by 31.8% to 35,538, from 26,961 units a year ago.
HDB resale segment remains robust
While the private resale segment saw a steep fall in the number of transacted units, the HDB resale segment gained 7% versus the first half of 2018.
With the additional property cooling measures having a minimal impact on the public housing sector, this segment has seen continued demand and price has been fairly stable throughout the year.
The Foolish bottom line
Private resale volume continues to be the main drag for APAC Realty. It is exacerbated by the fact that last year saw a large spike in resale volume due to the flurry of en-bloc sales. However, the second half of the year could see a pick up in new development transactions.
Based on the first six months of 2019, APAC Realty had an annualised price-to-earnings ratio of 17.7 and an annualised dividend yield of 2.9%.
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Jeremy Chia does not own shares in any of the companies mentioned.