DBS upgrades PropNex to a buy rating, lifts target price on expected ‘rebound’ in property market

DBS on Monday (Jan 6) upgraded its rating for real estate agency PropNex to “buy” and raised its target price for the stock on a positive outlook for its earnings as well as Singapore’s property market.

The bank raised its price target for PropNex to S$1.15 from S$0.95, an increase of about 21 per cent.

DBS says PropNex earnings are at an “inflexion point,” amid a “strong pipeline of new launches” for Singapore’s property market.

“[There is a] strong pipeline of new launches in 2025, with sales momentum normalising to historical levels. We anticipate a rebound in overall volumes in 2025, driven by new sales returning to c.8,000-8,500 units annually,” DBS analysts wrote.

They added: “With lower mortgage rates and a larger potential launch pipeline of 13,000 units across various projects islandwide, we anticipate stronger sales momentum in 2025.” 

This rebound will be further supported by stable property prices as well as buyers purchasing homes for their own stay, a wider array of projects with strong attributes and lower mortgage rates, said the analysts.

DBS predicts transaction volumes for 2025 to 2026 to stand at around 8,000 to 8,500 units, with private resale volumes remaining stable at 13,500 to 14,000 units.

Considering that PropNex’s market share in private new sales and resale has surpassed pre-pandemic levels by a “significant” margin and climbed to around 56 to 60 per cent, this indicates that one in every two sales is conducted by a PropNex agent, said DBS.

“As PropNex adds to its sales force… (the) potential increase in market share would present upside potential to our estimates,” they said, adding that the firm is already in leadership position with the largest sales network in Singapore at about 12,000 agents – accounting for around 34 per cent of the market share.

DBS forecasts an “attractive” dividend yield forecast of 7 per cent in FY2025/2026.

Should the real estate agency choose to distribute its cash reserves to shareholders at S$0.16 apiece, there may be “potential upsides” to this figure, the bank said.

However, the analysts cautioned that the group’s sales performance could prove slower than projected if weighed by an economic slowdown and higher-than-expected interest rates. 

As at the midday trading break on Tuesday, shares of PropNex were trading 0.5 per cent or S$0.005 higher at S$0.95.