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DBS upgrades PropNex and APAC Realty to ‘buy’ amid strong pipeline of new launches in 2025

By Felicia Tan

/ The Edge Singapore |

January 7, 2025 12:56 PM SGT

“We anticipate a rebound in overall volumes in 2025, driven by new sales returning to [around] 8,000-8,500 units annually," say DBS Group Research analysts Derek Tan and Tabitha Foo (Picture: Samuel Isaac Chua/The Edge Singapore)

DBS Group Research has upgraded its calls on PropNex and APAC Realty to “buy” from “hold” as both counters are tipped to benefit from a strong pipeline of new launches in 2025.

PropNex is the largest property agency in Singapore with around 12,000 agents accounting for 34% of the country’s market share. APAC Realty is one of the leading players in the real estate brokerage industry. It has a presence in 17 Asia Pacific (APAC) countries and one of the largest brand footprints in Asia through its ERA franchise network.

“We anticipate a rebound in overall volumes in 2025, driven by new sales returning to [around] 8,000-8,500 units annually. This is supported by stable property prices, with fluctuations expected in the range of +1% to +2%,” say Derek Tan and Tabitha Foo in both reports dated Jan 6.

The rebound will largely be driven by three main factors: lower mortgage rates; homeowners, upgraders and permanent residents buying homes for themselves; as well as the introduction of a wider array of projects with strong attributes.

In 2025 to 2026, the analysts also see private resale transactions remaining “stable” at 13,500 to 14,000 units. Sell-through rates could average between 30% to 50% during launch weekends, which could support a gradual turnaround in profitability for both agencies.

“The group’s market share in private new sales and resale has increased to 56%-60%, significantly higher than pre-pandemic levels,” note Tan and Foo for PropNex specifically, adding that these figures indicate that one in every two sales is made by a PropNex agent. With this in mind, a potential increase in market share as PropNex adds to its sales force, would present upside potential to the analysts’ estimates.

an and Foo have increased their target price estimates for both PropNex and APAC Realty to $1.15 and 50 cents from 95 cents and 48 cents respectively.

Their new target price for PropNex is pegged to 15 times the company’s P/E on rolled-forward and revised FY2025 earnings. PropNex’s FY2025 earnings estimates were lowered to account for lower overall sales and margins assumptions.

“We have moved the multiple towards +1 standard deviation (s.d.) (versus [a] five-year average of 12 times), as the market and the company’s profitability are at an inflexion point,” the analysts write. “[PropNex’s] FY2025/FY2026 dividend yield of 7.7% (80% payout ratio) is attractive, with potential upside if the group decides to distribute its cash reserves (16 cents per share) to shareholders.”

Meanwhile, APAC Realty’s new target price represents a higher P/E multiple of 13 times in line with its four-year historical average on rolled-forward FY2025 earnings.

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