APAC Realty Ltd: A more tempered trajectory
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- FY25 PATMI of SGD 20.6mn (+185% y/y) was c.5% above DBS and consensus estimates, driven by new home sales momentum
- Prospect of a special dividend still firmly in play, backed by strong cash position (c.12 Scts/share)
- Smaller launch pipeline to be reflected in FY26 results implies y/y performance likely to be weaker; lower our FY26F earnings estimate by c.23%
- Downgrade to HOLD with revised TP of SGD 0.70 (prev SGD 0.80) based on target P/E multiple of 13x on FY26F, following close to 80% share price rally over the past year and a more measured earnings growth profile ahead
What’s new:
APAC Realty reported 2H25 PATMI of SGD 9.3mn (+196% y/y), bringing the full-year PATMI to SGD 20.6mn (+185% y/y), which came in c.5% above DBS and consensus estimates. The outperformance was driven by higher-than-expected revenue on strong new home sales momentum, which increased 113% y/y to SGD 230.2mn. This was partly offset by a modest decline in resale and rental revenue (-1.6% y/y) to SGD 437.8mn while other revenue remained at SGD 3.0mn. With a shift in product mix to higher new private residential sales, gross profit and net profit margins expanded to 10.4% (+1.5ppt y/y) and 3.0% (+1.7ppt y/y) respectively in FY25. A final dividend of 1.8 Scts/share was declared (2H24: 1.2 Scts) on an enlarged share base post bonus issue, with full-year dividend at 4.05 Scts/share (adjusted 1H25: 2.25 Scts), which represents a payout ratio of 78.2%.
Our view:
While the absence of a special dividend was a mild disappointment, management signalled that a special payout remains on the cards. This is underpinned by a sizeable SGD 50mn cash position (c.12 Scts/share) that is almost 20% of its market cap, with limited reinvestment needs in our view, alongside its high cash-generative, asset-light business model. In addition, a potential value unlock from the divestment of its office building, possibly via a sale and leaseback structure, could pave the way for a bumper dividend.
Looking ahead, the Singapore residential market is expected to see several exciting launches in 2026 that are likely to garner strong interest. These include the sites at River Valley, Bayshore, Thomson View (en bloc), Tampines, Tengah, Lakeside, Dunearn Road and Chuan Grove. With the new launches predominantly located in the OCR (i.e. relatively lower price points compared to RCR and CCR), alongside several EC projects, take-up rates should remain healthy.
However, we note that 1H25 was a high base, given the strong project pipeline (from October 2024 to March 2025 due to time lag in revenue recognition) that saw more than 8,000 units launched. While the robust sales in 4Q25 across Skye at Holland, Penrith, Faber Residence and Zyon Grand (>90% of units sold) will be reflected in 1H26 results, which should help to support APAC’s earnings, the notably smaller launch pipeline from October 2025 to March 2026 of c.6,000 units (depending on project launch date) implies that y/y performance could be weaker. We also anticipate lesser units launching in April 2026 to September 2026 (that will be reflected in 2H26 results) compared to the same period a year ago, which would weigh on APAC’s earnings momentum.
We lower our FY26F earnings estimate by c.23% on lower new home sales; downgrade to HOLD from BUY. Our revised TP of SGD 0.70 (previous SGD 0.80) factors in the bonus issue and a change in valuation methodology to SOTP, comprising the agency business that remains pegged to 13x P/E (close to its historical average) + cash (given that management has indicated to reward shareholders). We turn neutral on APAC as we view valuations to be fair at current levels, following a close to 80% share price rally over the past year against a more measured earnings growth profile ahead (FY25-28F CAGR of 3.0%).
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