Oxley Holdings (OHL SP) - UOB Kay Hian 2017-11-22: Mayfair Garden Is The Latest En-bloc Trophy

Oxley Holdings (OHL SP) - UOB Kay Hian 2017-11-22: Mayfair Garden Is The Latest En-bloc Trophy OXLEY HOLDINGS LIMITED 5UX.SI

Oxley Holdings (OHL SP) - Mayfair Garden Is The Latest En-bloc Trophy

  • With the S$311m acquisition of Mayfair Garden, Oxley continues to have the second largest residential landbank among listed property stocks in Singapore.
  • Management plans to fast-track its Singapore launches before the slew of launches in 2H18. 
  • Overseas execution has been progressing well in the UK, Ireland, Cambodia and Indonesia, while China and Malaysia have been experiencing delays. 
  • Maintain BUY with a higher target price of S$0.74, pegged at a 20% discount to our RNAV.


  • Oxley has successfully bid S$311m for the collective purchase of 124-unit Mayfair Gardens, which will be funded by internal resources and bank borrowings.
  • More clarity into overseas execution; with good progress recorded.


Acquisition adds to Oxley’s strategic landbank accumulation in Singapore. 

  • With a bid of S$311m for Mayfair Gardens, Oxley has accumulated another 387 units to its residential landbank, now totals1,603 attributable units (Total: 3,220 units), the second largest among listed developers. Based on our estimates, the bid works to a breakeven of around S$1,700 psf, with selling price expectations above S$2,000 psf. 
  • We believe that the bid is mildly aggressive considering that nearby projects have seen recent transactions in the range of S$1,230-1,884 psf. The bid builds in >10% appreciation in residential prices. We estimate 2% accretion to our RNAV of S$0.93/share from the project.

Fast-track strategy in Singapore. 

  • Management believes in fast-tracking its Singapore launches, ahead of the slew of launches from the current en-bloc wave which may start hitting the market from 2H18 and 2019. By that, management targets to launch most of their existing Singapore projects by 1H18 (494 Upper East Coast, Lotus@Pasir Panjang, Serangoon Ville).

Overseas execution progressing well, with strong earnings visibility. 

  • The strong earnings visibility is backed by S$2.3b in unbilled contracts, which will be progressively recognised, consisting mainly of projects in the UK (Royal Wharf), Cambodia (The Peak and The Bridge) and Indonesia (Oxley Convention).   
    • Its Royal Wharf project, which is selling at price point of £600-£700 psf, is targeted at the mass market segment. The low drop-out rates at its Royal Wharf project is attributable to Oxley’s sales strategy of stepping up prices by about £50 psf in every selling phase. 
    • In Cambodia, The Peak is about half-sold, with one of the highest psf sold in the country. The Bridge is nearly sold out, with hand-over targeted in early next year (Jan-Feb 18). Management also expressed optimism in Indonesian projects, with plans to expand to other cities like Surabaya. 
    • In Batam, 337 of its 600 units in Oxley Convention City were sold (to all Indonesian buyers, due to the strata title issue). The buying interest has also been spurred by infrastructure developments (ie widened roads, upgraded shops) over the past year in Batam, due the island coming under federal control.

Ireland project likely to contribute next quarter. 

  • In the next quarter, we will also see recognition in revenue and profits from its Ireland project (Dublin Landings). Dublin Landings consists of 65,000 sqm of Grade-A office and retail space as well as 273 residential apartments. It comprises five blocks, one of which will be rented to the National Treasury Management Agency, while another has already solicited buying interest from six funds.

Gaobeidian project update. 

  • In the highly-anticipated Gaobeidian project, management explained the delay due to regulations in place (which require developers to apply to the municipal government for price-setting). Despite rigidity in the sale process, management believes its Gaobeidian portfolio is in a sweet spot, and does not feel pressured about selling. 
  • Since the announcement of China’s third special economic zone (Xiongan New Area), land sale has also been frozen. Recently, residential prices in the vicinity has risen from Rmb5,000 to Rmb9,000 psm (with prices expected to reach Rmb20,000 psm in the next two years).

Update on Malaysian projects. 

  • Its Penang project (Pepper Hill) has obtained the necessary planning permissions to change its land use from agricultural to residential mixed-use. However, its soft launch of commercial office in Oxley Towers KLCC faced a slow start due to the high price point, and was further exacerbated by restrictions on foreign buying (due to regulations requiring foreigners to form a company to make any purchases). Despite the poor sales, management is maintaining the prices.

15% UE stake. 

  • Management shared that its 15% stake in United Engineers (UE) is purely for investment purposes, due to its very attractive Singapore assets (which Oxley would not be able to amass on its own). 
  • Management believe that its Singapore assets can be made to work harder through asset enhancement initiatives to uplift its value.


  • Maintain BUY with a higher target price of S$0.74 (previously S$0.67), pegged at a 20% discount to our higher RNAV of S$0.93/share (from S$0.84). 
  • We have factored in the full future development profits for its overseas projects (up from half previously for most) due to increased visibility of Oxley executing its overseas projects, as well as c.2% RNAV accretion from Mayfair Garden project, and adjustments for bonus share issue.

Vikrant Pandey UOB Kay Hian | Peihao Loke UOB Kay Hian | http://research.uobkayhian.com/ 2017-11-22
UOB Kay Hian SGX Stock Analyst Report BUY Maintain BUY 0.74 Up 0.670