Oxley Holdings - RHB Invest 2020-09-29: Time To Enjoy The Fruits Of Labour; Maintain BUY


Oxley Holdings - Time To Enjoy The Fruits Of Labour; Maintain BUY

  • Oxley's management is focusing on completing its projects to ensure continuous cash flow. Its construction projects were disrupted by COVID-19 and delayed by 4-6 months in Singapore, Ireland and Malaysia due to global lockdowns. It was also impacted by fair value revaluation losses due to lower asset prices. As such, we cut our RNAV to SGD0.54, resulting in the lower Target Price.
  • Maintain BUY on Oxley Holdings with new Target Price of SGD0.27 from SGD0.29, 23% upside and c.6% yield.

Asset divestment to lower gearing.

  • Oxley Holdings (SGX:5UX) managed to divest Chevron House in FY20 (Jun), which generated an overall profit of SGD130m for the group despite being lower than initially expected due to COVID-19 affecting asset prices globally. Oxley Holdings also divested its 18.8% stake in Galliard Group to streamline its portfolio and divest non-core assets.
  • Management repaid and reduced its FY20 debt obligations by SGD630m – it will continue to lower gearing once it divests more assets and collect more cash from its progressive billings of its investment properties.

Singapore property scene still stable.

  • As at Aug 2020, about 3,109 units, representing 79.3% of Oxley Holdings’s total portfolio were sold and as at mid-Aug 2020, Oxley Holdings has SGD3.4bn to be collected progressively. During the Circuit Breaker, the company used virtual showrooms to showcase the layout of the units to potential buyers.
  • Management guided that it experienced pent-up demand for the residential units. From April to early August, Oxley Holdings issued more than 280 options-to-purchase agreements to buyers, garnering sales of > SGD330m.
  • Construction in Singapore has gradually resumed to full operations, and it can look to higher revenue and profit recognition in FY21F.

Enjoying the fruits of labour for the next few years.

Jarick Seet RHB Securities Research | https://www.rhbinvest.com.sg/ 2020-09-29
SGX Stock Analyst Report BUY MAINTAIN BUY 0.27 DOWN 0.290