Oxley Holdings - RHB Invest 2019-10-29: Opportunity To Liquidate United Engineers Stake; BUY


Oxley Holdings - Opportunity To Liquidate United Engineers Stake; BUY

  • BUY, SGD0.43 Target Price, 26% upside.
  • Yanlord Land (SGX:Z25)’s GO for United Engineers (SGX:U04) is at SGD2.60/share, giving Oxley an opportunity to unlock its value (an ongoing concern for many investors). If realised, Oxley will be able to channel the > SGD300m proceeds for other uses. See Yanlord Land Announcements; Yanlord Land Latest News.
  • With profits from the Chevron House sale, Dublin Landings and Cambodia, it should enjoy a record year in FY20F.
  • There could also be a possible special dividend for its 10-year anniversary, which we estimate at 3 SG cents (8.8% FY20F (Jun) yield).

A chance to unlock value in United Engineers.

  • OXLEY (SGX:5UX) owns 120.6m United Engineers (SGX:U04) shares, representing a 18.92% stake in the latter. (See United Engineer Share Price; United Engineer Dividend History)
  • Despite the general offer (GO) price of SGD2.60/share being lower than its cost (which we estimate at c.SGD2.70), this will enable Oxley to unlock SGD313.6m in cash – which can be used to pare down debts, reward shareholders with special dividends, or be used to invest in other property projects. This should also give the company an opportunity to arrest ongoing investor concerns regarding the direction of its stake in United Engineers.
  • Management is still exploring options, and will likely do what is beneficial for shareholders, in its view.

Nos. 4 and 5 Dublin Landings sale proceeds received.

  • Oxley has completed the sale of no.4 and no. 5 Dublin Landings at finalised prices of EUR98.6m and EUR106.5m (excluding value-added taxes). It has received 79.5% of the sales consideration from the purchaser, and the rest will go to National Asset North Quays DAC. This substantial amount of cash will likely help in lowering its gearing level, while raising the potential for special dividends this year. See Oxley Holdings Announcements.

Record FY20F, coupled with potential special dividends.

Jarick Seet RHB Securities Research | Lee Cai Ling RHB Invest | https://www.rhbinvest.com.sg/ 2019-10-29
SGX Stock Analyst Report BUY MAINTAIN BUY 0.430 SAME 0.430