OXLEY HOLDINGS LIMITED (SGX:5UX)
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.
- Oxley Holdings' Royal Wharf project, which is more than 98% sold, is expected to be fully completed and sold before end-2Q21. The residential blocks at Dublin Landings, which have been sold to Greystar, will be progressively completed by 3Q21.The Peak project in Cambodia (87% sold) has just achieved temporary occupation permit (TOP) for the retail component while the residential and office towers are targeted for completion during the same period. On completion of these projects, Oxley Holdings will finally be able to realise the fruits of its labour, aside from strengthening its balance sheet while still paying attractive dividends of 5.8% for FY21F.
- Oxley Holdings paid a total of 1.86 SG cents, which represents an attractive 8.5% yield for FY20.
- See Oxley Holdings Share Price; Oxley Holdings Target Price; Oxley Holdings Analyst Reports; Oxley Holdings Dividend History; Oxley Holdings Announcements; Oxley Holdings Latest News.
- Key risks: Recession and a crash in property prices.
Jarick Seet
RHB Securities Research
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https://www.rhbinvest.com.sg/
2020-09-29
SGX Stock
Analyst Report
0.27
DOWN
0.290
