Excerpts from RHB Research report

Analyst: Goh Han Peng 

oxleytower2Oxley Tower in Robinson Road achieved TOP in Dec 2016, and will contribute revenue in excess of S$500 m for recognition in FY17 (end-June).Oxley has SGD2.7bn in total unbilled sales – the highest among Singapore developers – across its local/overseas projects, which would underpin record profits over the next few years.

It now has a sizeable portfolio across eight countries outside of Singapore, with projects in the UK and Cambodia at advanced stages and a pipeline of upcoming launches in Kuala Lumpur, Dublin, Batam and Yangon.

This would drive the next wave of NAV growth. We like the company for its dynamic management and ability to stay ahead of the curve while managing its risks well. 

 

June 2014 June 2015 June 2016 June 2017F June 2018F
Total turnover (SGDm) 1,074 702 981 1,050 1,143
Reported net profit (SGDm) 287 61 206 325 293
Source: Company data, RHB


Record profitability in FY17 underpinned by SGD2.7bn of unbilled sales. Oxley has executed its project pipeline well and presold SGD2.7bn worth of properties across its local and overseas projects. High-yielding mixed development projects such as KAP & KAP Residences, NEWest, and Midtown are on track for completion in the next few months, while the group has started handing over units at Royal Wharf since Aug 2016.

Solid progress in overseas launches. While sales from Singapore were the key driver in FY16, we expect the group’s overseas projects to feature more prominently, going forward. Of the group’s SGD2.7bn unbilled sales, SGD1.8bn are from overseas projects such as the UK and Cambodia.

New launches in the pipeline include Oxley Towers KLCC in Malaysia, Min Residences in Myanmar and Oxley Convention Centre in Batam. In Dublin, the group is developing a 60,000 sqm Grade-A office and over 200 apartments in the CBD, next to the proposed headquarters of the Central Bank of Ireland.

Goh Han Peng"We expect SGD1.9bn worth of projects receiving temporary occupation permits in the next 12 months. This would underpin a record year in FY17, with reported net profit of SGD325m. Oxley remains one of our Top Picks in the property sector, and we maintain our BUY recommendation with a TP of SGD0.85."

-- Goh Han Peng, analyst  (photo)

Building up a recurring income base. Oxley is also steadily growing its recurring income base with its first hospitality project in Singapore, The Pines, featuring two hotels (782 rooms) and commercial shop space, likely to be completed in the next 12 months. The company’s newly-completed industrial building, Space@Tampines, is currently ~94%-leased and is likely to further bolster recurring income.

A Top Pick within the sector. The group’s net gearing has fallen to 2.3x from 2.7x in the last 12 months, and we project this to decline to 1.5x by end-FY17 as cash continues to pour in from Royal Wharf and its Singapore project. We expect SGD1.9bn worth of projects receiving temporary occupation permits in the next 12 months. This would underpin a record year in FY17, with reported net profit of SGD325m. Oxley remains one of our Top Picks in the property sector, and we maintain our BUY recommendation with a TP of SGD0.85.


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