$$$ KPO and CZM $$$: APAC Realty

Sunday, December 10, 2017

APAC Realty

We have purchased 12,000 units of APAC Realty last week (7th December 2017) at $0.86. The IPO price was at $0.66, opened at $0.695 on 28th September 2017 and went as high as $0.975! At the point of writing this article, the price is currently at $0.865.

The latest 3rd Quarter financial statement was pretty good where the revenue till date for the year (9 months) improved by 30.3% and the profit by 64.6%!

In its IPO prospectus, using the adjusted 2016 EPS of 4.47 cents and IPO price of $0.66, the PE ratio was about 14.76. If we were to use a more conservative approach, we know the PE for 2016 is 4.47 so the EPS for the last quarter is probably 4.47 - 3.52 = 0.95. Assuming that the remaining 2017 (last quarter) would perform as good/bad as 2016, the full year EPS estimate would be around 5.78 + 0.95 = 6.73. At our entry price of $0.86, the PE ratio is at 12.78!

Alternatively, we can also estimate the EPS by averaging and extrapolating it to give 5.78 / 3 x 4 = 7.71. That would bring the PE ratio down to 11.15! If the market is willing to pay/value it at 14.76 PE initially, the price should go up to $0.99 to  $1.14? Does this mean it is currently cheaper than it first IPO or it is a must buy? I do not know. lol. The above numbers are just estimations made by a regular IT guy based on one of the many financial ratios. Do take it with a pinch of salt :)

Taken from RHB Research Report
What we like about the business is that it is easy to understand - real estate brokerage services (commissions) and other revenue from training fees, franchise fees, etc.

The other revenue only contributes about 2-3% as compared to the core real estate brokerage services. Do you foresee Singapore property market recovering/getting better?

For more in-depth analysis, do read what the pros have written:
- Singapore IPOs: APAC Realty
- SmallCapAsia: APAC Realty
- SG Investors.io: DBS Research - $1.12
- SG Investors.io: RHB - $1.20

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