Oxley Holdings - Maybank Kim Eng 2018-08-27: Profit Surge On Revaluation Gain

Oxley Holdings - Maybank Kim Eng Research 2018-08-27: Profit Surge On Revaluation Gain OXLEY HOLDINGS LIMITED SGX:5UX

Oxley Holdings - Profit Surge On Revaluation Gain

Maintain HOLD; Target Price raised 6% to SGD0.36

  • Oxley Holdings’ FY18 EBIT was in line at 91% of our full-year estimate. We update our model for its latest project completion timeline and raise our valuation for Chevron House after incorporating its latest AEI details.
  • Our FY19/20E EPS is tweaked by +4%/-2% and we introduce FY21E forecasts. We roll-forward our valuation basis and lift our RNAV estimate to SGD0.71 from SGD0.68. Our Target Price is raised 2 cts to SGD0.36, based on an unchanged 50% RNAV discount.
  • With a diversified geographical and business exposure, we believe Oxley can weather the headwinds to Singapore’s residential market. Nonetheless, we expect its steep valuation discount to persist as the market remains cautious towards highly leveraged developers.
  • Maintain HOLD.

Revaluation gains at Chevron House led profit surge

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  • Driven by the revaluation of Chevron House, Oxley Holdings booked fair value gains of SGD118m for the year. This lifted net profit by 31% to SDG285m for FY18.
  • Management revealed updated AEI plans for Chevron House, which showed a 14% increase in NLA from our original estimates. 
  • As such, we update our model and lift our post-AEI valuation for the property to SGD950m (from SGD835m) and factor in a revised CAPEX guidance of SGD100m (from SGD35m).

Improved gearing

  • Despite taking on another SGD0.1b of debt over the quarter, Oxley Holdings’ net gearing improved by 22bps to 2.17x due to the increase in asset values. 
  • Nonetheless, Oxley’s elevated gearing levels could limit its ability to take on more projects, in our view. We estimate debt headroom of SGD0.7b due to its debt covenant gross debt-to-asset limit of 0.70x.

Strong pre-sales; Sticking to launch plans

  • Oxley achieved strong pre-sales of SGD1.15b for the five Singapore residential projects launched this year. On an aggregate basis, 27% of the 4,000 units in its development pipeline have already been sold. Despite the recent policy tightening, Oxley intends to launch another SGD3.9b worth of projects this year.
  • Outside of Singapore, it has booked SGD0.8b of sales at Royal Wharf, KLCC (So Sofitel Resi), Dublin Landings, The Palms and The Peak, and expects to launch another SGD3.4b worth of other projects in the year ahead.

Swing Factors 


  • Sharp rise in Singapore home prices. 
  • Sales of investment properties or hotels. 
  • Successful execution of overseas pipeline. 


  • Poor sales at Singapore residential projects. 
  • Spikes in interest rates. 
  • Poor overseas execution. 

Derrick Heng CFA Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2018-08-27
SGX Stock Analyst Report HOLD Maintain HOLD 0.36 Up 0.340