PropNex’s 1Q19 net profit dropped 68 percent amid lower commission income

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PropNex reported Tuesday its first quarter net profit dropped 67.6 percent on-year to S$2.0 million amid lower commission income during the traditionally tepid quarter.

Revenue for the quarter ended 31 March fell 27.8 percent on-year to S$74.21 million, mainly on lower commission income, the realtor said in a filing to SGX.

Commission income from project marketing services fell 60.6 percent on-year in the quarter to S$14.4 million as a significant number of option-to-purchase have not been completed as of the end of the quarter, PropNex said.

Revenue recognition usually occurs a few months after the option-to-purchase is issued, and transactions at the initial launch of recent popular projects, such as Treasure@Tampines and The Florence Residences, both launched in March, will only be recognized in quarters ahead, the filing said.

Other income increased 40.4 percent on-year to S$1.3 million in the quarter, mainly on an increase in marketing and advertising fee income, it said.

“The first quarter is traditionally a subdued period for us, as new launches and buying activity tend to taper off during the Lunar New Year period,” Ismail Gafoor, co-founder, executive chairman and CEO of PropNex, said in the filing.

“The reduced number of new launches in the first two months of the year, compounded by the effects of the property cooling measures and increase in interest rates have inevitably impacted our financial performance,” he said.

But he added that in March, developer sales rebounded, signaling buyers and investors were feeling more confident.

In its outlook, PropNex said it expected the private property market would pick up momentum in the second half of 2019 as en-bloc owners receive their sale proceeds and look for replacement homes with immediate occupation.

It added that there were another up to 66 projects to be launched this year, with PropNex appointed for 46 projects so far.

 

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