Propnex reports 2Q19 net profit declined 12 percent as cooling measures weigh

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PropNex reported Tuesday its second quarter net profit fell 11.9 percent on-year to S$3.70 million on lower commission income in the wake of the Singapore government imposing property cooling measures a year earlier.

Revenue for the quarter ended 30 June dropped 24.3 percent on-year to S$92.09 million, the realty company said in a filing to SGX.

Agency services’ commission income fell 25.5 percent on-year to S$70.5 million in the quarter as the year-earlier period was bolstered by strong en-bloc activity before the cooling measures, boosting resale activity in the first half of 2018, the filing said.

Project marketing services’ commission income declined 22 percent on-year to S$19.8 million as a significant number of option-to-purchase deals weren’t completed as of 30 June, PropNex said.

“A year on from the implementation of the property cooling measures, we are seeing the primary private market recovering strongly since cooling measures were first introduced in July last year,” Ismail Gafoor, executive chairman and CEO of PropNex, said in the statement.

“We expect the market to remain resilient and strong sales momentum to carry through to the end of this year, driven by a strong pipeline of attractive new launches,” he said.

But he added that the private resale market, which was hardest hit by the cooling measures, is still under pressure.

“The change in sentiment towards these properties has led to owners postponing and holding off the decision to sell their properties in the current economic climate,” Ismail said.

PropNex declared an interim dividend of 1.25 Singapore cents, compared with no dividend for the year-ago period.

For the first half, PropNex posted net profit of S$5.70 million, down 45 percent on-year, on revenue of S$166.30 million, down 25.9 percent on-year.

In its outlook, PropNex noted sales performance tends to outperform in the second quarter, compared with the first quarter, on holiday periods, with sales momentum picking up afterward.

“With the line-up of possibly over 26 new launches in the second half of 2019, the group expects the sales activities to continue for the remainder of the year, with momentum and demand staying resilient,” PropNex said.

“On the public housing front, the HDB resale market is reflecting continuous demand and price stabilization,” it added.

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