• APAC Realty’s entry into Hainan market offers a stepping stone to tap into the vast potential of China’s real estate market. While near-term earnings contribution may not be significant, the move provides lot of intangible benefits in terms of understanding the dynamics of real estate agency business in China, and potentially cross-selling its Singapore projects to Chinese clients.
• In our view, these diversification strategies are pivotal for long-term earnings sustainability and will help mitigate cyclical vagaries of Singapore’s real estate market.
• The stock currently trades at reasonable 8.8x FY18F P/E vs global peers – 11.7x, and offers healthy yields of > 6%.
• Maintain BUY and Target Price of SGD0.77, offering 33% upside.

Source: RHB Invest Research - 31 Aug 2018