Propnex profits slips 45% to $5.7m in H1

Commission income fell as strong en-bloc activities before the cooling measures contributed to the strong resale activities in H1 2018.

Propnex profits after tax and minority interests (PATMI) crashed 45% YoY in H1 to $5.7m from $10.37 over the same period last year, an announcement revealed. Revenue also fell by 25.9% YoY to $166.3m from $224.36m previously.

The company attributed the drop to the 25% decline in commission income from agency services to $70.5m in the second quarter from $94.6m last year. “Commission income from agency services decreased against 1H2018 as strong en-bloc activities before the cooling measures have contributed to the strong resale activities during the first half of 2018,” it said.

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Meanwhile, commission income from project marketing services also declined by $5.6m or a 22% YoY fall to $19.8m in Q2 from $25.4m in Q2 2018, which was blamed on the as a significant number of option-to-purchase have not been completed as at 30 June.

For the second quarter, PATMI dropped by 11.9% YoY to $3.7m from $4.2m in Q2 2018, whilst revenue also fell by 24.3% YoY from $121.6m from $92.09m last year.

Net cash used in investing activities remained the same $0.7m for both periods H1 2018 and 2019. Increase in acquisition of plant and equipment was offset by a decrease in acquisition of trademark n and an increased interest income.

Net cash used in financing activities decreased to $14.4m in H1 compared to $14.8m recorded in H1 2018, mainly due to the decrease in dividends paid to non-controlling interests of approximately $2million and decline in share issuance expenses amounting to $1.5m. This was partially offset by the increase in dividends paid to owners ($1.7m) and repayment of lease liabilities ($1.3m).

“A year on from the implementation of the property cooling measures, we are seeing the primary private market recovering strongly. 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,” said Ismail Gafoor, executive chairman and CEO of Propnex.

“On the other hand, the private resale market, which was the hardest hit by cooling measures, is still feeling the effects. Coupled with the recent economic uncertainties, 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,” he added.

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The company expects sales activities to continue for the remainder of the year, with momentum and demand staying resilient, driven by a line-up of possibly over 26 new launches in the second half of the year. However, Propnex noted that whilst private home prices may see a positive price growth in 2019, the private resale market is projected to remain relatively subdued.

Propnex declared an interim dividend of $0.0125 per ordinary share payable on 16 September.