Excerpts from UOB KH report

Analysts: Peihao Loke & Nicola Ho

Impeccable Track Record
Oxley trades at an attractive 52% discount to our S$0.72 RNAV (0.9x P/B), fromundue “overhang” of cooling measures and gearing concerns.

Oxley

Share price: 
34 c

Target: 
50 c

Much less appreciated is the group’s stellar Singapore residential sales (about 63% sold) and S$3.9b unbilled sales (vs S$3.1b net debt).

The group also had a demonstrable 22%ROE (peer average: 7%) in 2014-18, enabled by its fast turnaround, astute landbankingand leverage.

Resume coverage with BUY and target price of S$0.50, pegged at a 30% discount to RNAV.


• Strong earnings visibility from diversified base; spreads out local regulatory risks. Oxley Holdings (Oxley) has a diversified earnings base with S$3.9b of S$7.5b in secured development sales yet to be collected, spread across Singapore (56%), the UK (15%), Ireland (15%), Cambodia (11%), Malaysia (2%) and Indonesia (1%); this can help the group balance the risk of changes in local government measures.

Singapore residential sales (c.63% sold) to remain stellar, thereby transferring holding risk to buyers. As of end-Sep 19, Oxley had sold about 63% of its 2,226 attributable units (total: 3,814 units/est. GDV: S$4.86b).

ericlow Feb2017Deputy CEO Eric Low (foreground) with chairman Ching Chiat Kwong. NextInsight file photoManagement expects Singapore residential sales to reach 70% by end-19 (and sell out completely in 12-15 months).

Upcoming nearby rival launches (eg Sengkang Grand Residences, Royal Green) are also expected to draw new buying interest to Oxley’s more attractively-priced projects.

Gearing concerns overblown; to subside on project completions and potential hotel sale. Net gearing has declined steadily (from high of 6.22x in FY10) to 2.05x inFY19.

Much less appreciated is Oxley’s high cash flow visibility from S$3.9b unbilled sales (vs S$3.1b net debt).

Of this, unbilled sales from overseas projects (S$1.7b), likeRoyal Wharf, Dublin Landings, The Peak, are proven in terms of revenue recognition andcash collection.

The remaining S$2.2b Singapore progress billings are unlikely to see drop-offs (ie given the progressive payment scheme where 20% of purchase price is committed at the point of booking a unit).

hotels10.17Land tenure of Novotel & Mercure Singapore on Stevens has been converted to freehold, which will further increase its appeal to buyers.Management may revisit the sale of Novotel & Mercure Singapore on Stevens (totalling 772 rooms, 11 commercial units) with an indicative valuation of S$1.053b in 2020 if there are good offers, as the supply situation is expected to tighten on the back of more regional events in even years (eg 2020 and 2022).

Amid signs of growing investor interest, cap rates for Singapore hotels also compressed to 3.25% (vs 4.5% a year ago), based on valuers’ input in their FY19 annual reports.

Land tenure of Novotel & Mercure Singapore on Stevens has also been converted to freehold, which will further increase its appeal to buyers.


Re-initiate with BUY. We re-initiate coverage on Oxley with BUY and a target price of S$0.50, based on a 30% discount to RNAV of S$0.72/share.



Full report here


Share Prices

Counter NameLastChange
AEM Holdings3.6300.200
AusGroup0.021-
Avi-Tech Electronics0.4300.005
Best World Int.1.360-
CEI0.890-
China Sunsine0.335-0.005
CNMC GoldMine0.2650.010
CSE Global0.4650.010
Food Empire0.590-0.005
Golden Energy0.164-
GSS Energy0.0540.002
ISDN Holdings0.400-0.005
ISOTeam0.149-0.001
IX Biopharma0.230-0.005
JB Foods0.5750.020
KSH Holdings0.325-0.005
Medtecs Intl1.110-0.110
Moya Asia0.063-
Nordic Group0.200-
Oxley Holdings0.2200.005
Procurri0.3200.005
REX International0.142-
Riverstone3.430-0.120
Roxy-Pacific0.320-0.005
Sing Holdings0.380-
SingMedical0.2550.010
Straco Corp.0.490-
Sunningdale Tech1.450-
Sunpower Group0.5400.015
The Trendlines0.088-0.002
Tiong Seng0.140-
Uni-Asia Group0.4250.005
Yangzijiang Shipbldg0.995-

NextInsight RSS

rss_2 NextInsight - Latest News

Online Now

We have 448 guests and no members online