Oxley Holdings - UOB Kay Hian 2021-08-31: FY21 Weaker-Than-Expected Results, But FY22 Should Be Better

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OXLEY HOLDINGS LIMITED (SGX:5UX)

Oxley Holdings - FY21 Weaker-Than-Expected Results, But FY22 Should Be Better

• While Oxley rebounded from a loss in FY20 to recording S$13m in PATMI for FY21, this was nevertheless weaker than expected due to one-off items as well as the voluntary administration of an Australian subsidiary. Looking ahead, we believe that FY22 will be a stronger year as a number of projects in Singapore and overseas will be completed.
• Oxley appears inexpensive, trading at 4.9x FY22F P/E with a 4.7% yield. Maintain BUY with a lower target price.

Oxley reported weaker-than-expected numbers due to one-off items.

• While Oxley Holdings (SGX:5UX) reported a 33% increase in revenue to S$1.4b which was largely in line with our expectations, the company’s PATMI of S$13m fell short of our estimates due to larger-than-expected impairments as well as a loss of S$40m from its Australian subsidiary, Pindan, which entered voluntary administration. Excluding these one-off items, Oxley would have reported a net profit of S$137m. A final dividend of S$0.0025/share was declared.
• Singapore property market issues not expected to have a major impact. With the Temporary Occupation Permit (TOP) achieved recently for its Verandah project, Oxley has another four other projects which it believes are on track and will not be delayed due to the current labour crunch. The company stated that the Building and Construction Authority is now very fast at testing and tracing COVID-19 cases compared with last year, and various government agencies are trying their best to help developers with construction issues.

More concentration on developed markets going forwards.

• While Oxley will continue to hit pricing thresholds if such properties came to the market. In addition, management stated that they were wary about policy risk going forward if prices keep rising.

Debt levels declining; Oxley appears well positioned to deal with ~S$1.8b debt tower in FY23.

• Oxley's total borrowings declined divesting in 2-3 years’ time when the market has normalised.

Raising Oxley's earnings estimates.

• We have upgraded our earnings estimates for FY22 and may likely contract, which may not be a bad thing.
• See
  • Oxley Holdings's Share Price,
  • Oxley Holdings's Target Price,
  • Oxley Holdings's Analyst Reports,
  • Oxley Holdings's Dividend History,
  • Oxley Holdings's Announcements,
  • Oxley Holdings's Latest News.
• Looking ahead, Oxley appears to be well placed for the next two standard deviation below its five-year historical average of 1.2x.

SHARE PRICE CATALYST

• Positive newsflow on take-ups and/or handovers for Singapore and overseas projects.

Adrian LOH UOB Kay Hian Research | https://research.uobkayhian.com/ 2021-08-31

SGX Stock Analyst Report BUY MAINTAIN BUY 0.28 DOWN 0.370