RHB Research 2015-07-07: Oxley Holdings - Good Take Up Rates for Overseas Project Will Drive the Next Wave of Re-Rating. Maintain BUY with TP S$0.91.

  • Oxley Holdings (OHL SP) announced that it has sold its rights to the grounds rents for phases one and two of its London waterfront project, Royal Wharf, to Adriatic Land East Limited for a sum of £34.5m. Royal Wharf is Oxley’s maiden overseas project and the 999-year leasehold parcel will accommodate 3,400 homes, supporting retail amenities and a waterfront park when completed. 
  • To date, Oxley has grossed over £700m in revenue for the first two phases of the project comprising some 1,700 units, with profits to be booked from FY16/17 onwards as the project reached completion. 
  • Sales enquiries remained strong and Oxley plans to launch a third phase in October. The next few months will be an extremely busy period for the developer as it rolls out a string of new overseas projects in Yangon, Kuala Lumpur, Batam and Cambodia. 
  • We expect Oxley to report modest earnings for FY15, before chalking up a new wave of record profitability from FY16 onwards as major commercial projects and overseas launches reached completion. 
  • We continue to like the stock for its dynamic management and good earnings visibility from its substantially-sold Singapore projects. Good take-up rates for its overseas projects will drive the next wave of re-rating. 
  • Our TP of SGD0.91 is based on 20% discount to its RNAV. Maintain BUY

(Goh Han Peng)

Source: http://www.rhbgroup.com/