RHB: Weakness in APAC Realty is buying opportunity

Singapore five-dollar note Photo by Leslie Shaffer

Shares of APAC Realty have been underperforming despite Singapore’s improving residential property outlook and that offers a buying opportunity, RHB said in a note last week.

“Fundamentally, we believe APAC is in a strong position to tap the ongoing boom in residential sales,” it said, attributing the stock’s recent selldown to the potential listing of another leading Singapore real estate agency later this year and concerns over the potential for sector cooling measures.

“Overall, residential demand is expected to remain buoyant, driven by replacement demand from en-bloc sellers, and ample liquidity from sales proceeds,” it said, adding that APAC Realty’s ERA subsidiary had an overall market share of 36.3 percent in the first quarter, across the primary residential, HDB resale and private resale markets.

Last week, APAC Realty reported its first-quarter net profit rose 46.8 percent on-year to S$5.9 million, while revenue was up 56.7 percent on-year at S$105.23 million. RHB said that accounted for 20 percent of its full-year estimates, which it viewed as in line as the second half is typically stronger, with more project launches.

It kept a Buy rating on the stock with a S$1.35 target price. It said the stock valuation was attractive at a 2018 price-to-earnings ratio of 12 times, a more than 10 percent discount to comparable global peers.

The stock ended Friday down 4.37 percent at S$0.985.