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With Propnex down by 32% from its peak, we did research on this stock with an impressive return on investment of 37%.

It fared well on almost all counts as compared to Apac Realty. It has management with skin in the game.

However, we do feel that the drop in share price could be a leading indicator of property prices in Singapore which are still holding well at record highs.

Therefore, we are of the view that there could be further downside before it becomes attractive again. 

Here is the link to our research article:
I reckon one is truly a dividend stock - When you don't have a low ROIC business (coming probably from been asset light), don't need to invest a lot of additional money into "new technology/machinery" just to keep up to competition, and most importantly, the controlling shareholders are willing to share.

Minutes of the Annual General Meeting of the Company (“AGM” or “Meeting”)

A shareholder raised two questions on (i) reason(s) for the drop in 2H2023 results and whether it was impacted by money laundering issue; and (ii) the dividend payout for FY2023 of 92.9%, was higher than past three financial years (FY2020: 70%, FY2021: 77%, FY2022: 80.1%) although FY2023 results was lower. Any change to the dividend policy to increase the dividend payout ratio going forward.

The Chairman replied that (i) the financial performance of 2H2023 was marginally better than 1H2023. FY2023 financial results was lower than FY2022 due to several factors such as lower stocks and supply of new launches, rise in interest rates and investors waiting to see the impacts, global uncertainties and etc. Overall, transaction volume across Singapore dropped in FY2023.

Nonetheless, PropNex had done fairly well in FY2023 and had improved market shares in some of the segments in a challenging environment. The Chairman confirmed that the money laundering investigation did not have any significant impact to the Company as of the date of the Meeting; and (ii) the Company has a dividend policy of declaring 75% to 80% of net profit attributable to shareholders and intends to retain this percentage. PropNex is a dividend stock. Despite the challenges with the decreased revenue in FY2023, the Company decided to reward shareholders with higher dividend payout ratio as it has decent cash balance. He clarified that it is not a new norm.

While the 75% to 80% payout ratio serving as a guideline, the Board remained open and flexible in dividend distribution to reward shareholders when deemed appropriate based on the Company’s financial position and other considerations such as no significant needs for expenditures.

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