TL:DR
Business Profile
Source: APAC Realty
APAC Realty is a real estate services provider, holding the exclusive ERA regional master franchise rights for 17 countries. Through this network, the Group has 16,800 salespersons across 639 offices. Additionally, they are also one of the largest ERA Member Brokers globally by transaction value. The Group also holds the master franchise rights for Coldwell Banker in Singapore, which is one of the oldest and most established real estate office and franchising companies in the United States.
Source: The Online Citizen
Income Statement Analysis
For 2018 itself, the profitability of the firm seems rather weak. Their margins have weakened over time as well. Revenue and earnings have both grown, but profitability margins have weakened it seems.
Balance Sheet Analysis
The firm's balance sheet seems quite strong. The only weaker points are the current ratio as well as the operating cash flow ratio. As a whole, however, the balance sheet seems strong.
These ratios seemed to have gotten weaker over time as the company took on more debt. However, I don't think this made much of a difference to the balance sheet health.
Free Cashflow Analysis
Free Cashflow of the was negative due to high reinvestment in the firm. there was also an increase in working capital which reduced cashflows. The earnings of the firm seemed to have decreased slightly too. Free Cashflow to Equity was positive due to more debt being taken on. The firm also had a dividend payout ratio of 0.59, which is quite high. Due to the negative free cash flow, management would have needed to dig into the cash holdings to pay out dividends. If their investments don't start generating cash flows in the near term, I highly doubt that these level of dividends can be sustained.
Efficiency Metrics
The firm is quite efficient in its use of capital. The high ROE can be attributed to the high asset turnover as well as high equity multiplier ratio. The Return on Capital is also strong. If ROC continues to be this strong, the huge reinvestment that occurred in 2018 would like pay-off with very strong earnings in later years.
Valuation
The valuation of the shares looks pretty attractive with low equity multiples. These multiples are supported by companion fundamentals that look attractive too.
Cost of Capital
Given the high-interest coverage ratio, the cost of debt associated with the firm is low. However, without a Beta figure, calculating the cost of equity would be more challenging. Even with a high beta of 2.0, this would still be much lower than ROIC. Hence, the capital invested in the firm is generating more returns than they cost.
Share Price Performance and Risks
The average monthly returns for the shares have been negative, as well as the 52-week return of -46%. The recent fall in shares is reflected in the low percentage of their 52-week high. Sharpe Ratio for the shares is negative, quite a bad sign as the risks associated with the shares seem to outweigh the returns.
TL:DR
Business Profile
Source: APAC Realty
APAC Realty is a real estate services provider, holding the exclusive ERA regional master franchise rights for 17 countries. Through this network, the Group has 16,800 salespersons across 639 offices. Additionally, they are also one of the largest ERA Member Brokers globally by transaction value. The Group also holds the master franchise rights for Coldwell Banker in Singapore, which is one of the oldest and most established real estate office and franchising companies in the United States.
Source: The Online Citizen
Income Statement Analysis
For 2018 itself, the profitability of the firm seems rather weak. Their margins have weakened over time as well. Revenue and earnings have both grown, but profitability margins have weakened it seems.
Balance Sheet Analysis
The firm's balance sheet seems quite strong. The only weaker points are the current ratio as well as the operating cash flow ratio. As a whole, however, the balance sheet seems strong.
These ratios seemed to have gotten weaker over time as the company took on more debt. However, I don't think this made much of a difference to the balance sheet health.
Free Cashflow Analysis
Free Cashflow of the was negative due to high reinvestment in the firm. there was also an increase in working capital which reduced cashflows. The earnings of the firm seemed to have decreased slightly too. Free Cashflow to Equity was positive due to more debt being taken on. The firm also had a dividend payout ratio of 0.59, which is quite high. Due to the negative free cash flow, management would have needed to dig into the cash holdings to pay out dividends. If their investments don't start generating cash flows in the near term, I highly doubt that these level of dividends can be sustained.
Efficiency Metrics
The firm is quite efficient in its use of capital. The high ROE can be attributed to the high asset turnover as well as high equity multiplier ratio. The Return on Capital is also strong. If ROC continues to be this strong, the huge reinvestment that occurred in 2018 would like pay-off with very strong earnings in later years.
Valuation
The valuation of the shares looks pretty attractive with low equity multiples. These multiples are supported by companion fundamentals that look attractive too.
Cost of Capital
Given the high-interest coverage ratio, the cost of debt associated with the firm is low. However, without a Beta figure, calculating the cost of equity would be more challenging. Even with a high beta of 2.0, this would still be much lower than ROIC. Hence, the capital invested in the firm is generating more returns than they cost.
Share Price Performance and Risks
The average monthly returns for the shares have been negative, as well as the 52-week return of -46%. The recent fall in shares is reflected in the low percentage of their 52-week high. Sharpe Ratio for the shares is negative, quite a bad sign as the risks associated with the shares seem to outweigh the returns.